Details of last year’s complex pre-pack deal, which resulted in Polestar owner Sun European Partners acquiring the trade and assets of Benhamgoodheadprint (BGP) and Stones the Printers, have been laid out in the SIP16 report produced by administrators at KPMG.

The Sun/Polestar offer was preferred over a separate bid of £15m for BGP alone, understood to be from Prinovis, and a third unqualified offer for the group.

As part of the deal, Sun agreed to take on bank and asset finance liabilities of £19.5m, and made a £400,000 payment towards the administrators’ fees and expenses. 

The transaction also involved Sun paying £243,000 under SIP16 legislation to cover the prescribed part of Goodhead owner Sir John Madejski’s debenture "so that the transaction could be structured in accordance with Sun’s offer and so that the unsecured creditors would not be prejudiced by the transaction being structured this way," stated KPMG.

This is the only money available for unsecured creditors.

Paperlinx Group companies Howard Smith and Mason’s Paper are owed a total of £1.2m, while ink supplier Flint Group is the single-biggest creditor and is owed £1.1m.

Flint commercial director for web David Fotheringham said: "We are considering our position and working with our legal team to see what our options are. It’s the principle that we’re struggling with. The whole thing is legal and could happen again tomorrow."

A number of other creditors declined to comment. One creditor, speaking under condition of anonymity, said: "Obviously it’s disgusting. They must have known this was coming. But as we want to carry on doing business with the ‘newco’, I can’t say publicly what I really think."

However, both KPMG and Goodhead’s former directors have insisted that a pre-pack sale was not inevitable from the outset, and that a going concern sale of the businesses was a realistic possibility. Events came to a head on 26 November, when no further funding was forthcoming from Sir John and the company was unable to meet that month’s payroll of £920,000.

In a statement, Goodhead’s then-group finance director Mike Edwards said: "Although discussions were proceeding with Sun Capital, the board was also investigating a number of other options for the business during this period and it was only on 26 November that it reached the conclusion that it was in the best interests of all of the stakeholders to proceed with the insolvent sale to Sun Capital. The directors were advised by Gateleys and KPMG as to their duties to the stakeholders, including the group’s suppliers, during this period and the directors endeavoured to ensure that their professional advice was followed. We worked closely with our advisers to ensure that the business was run in an appropriate manner during the negotiation period."

The report also states that Sir John’s shareholding in Polestar Print Holdings equates to a 10% stake in that entity. In exchange, Sir John released his security over assets of some £39.4m.

According to the KPMG statement, he also agreed to other conditions "including new terms relating to waivers of rent payable to a company connected with Sir John, and personal guarantees."

In addition, Sir John’s guarantees over other debts of around £11.1m were to remain in place until Sun/Polestar could either satisfy the liabilities or make other arrangements.