The statement of administrator's proposal, filed at Companies House by administrators from Kroll Advisory on behalf of Morgard Court Ltd, which traded as Gardners, showed that unsecured creditors were hit to the tune of just over £2.92m, made up of nearly £875,000 of intercompany dues and the remainder being trade and expense creditors.

Six-figure sums were owed to a couple of industry suppliers, with many others, including other printers, owed sizeable five-figure sums.

Shareholder Friars 730 Ltd was owed £728,993 while parent Hexcite Group was owed £145,570.

HMRC was owed just under £1m, while secured creditor Secure Trust Bank was owed nearly £1.55m.

Gardners’ book debts were estimated to realise around £1.44m, with other assets estimated to realise around £100,000. This includes inventory and stock with a book value of £533,988 that was estimated to realise just £69,994 according to the report.

PFI Group bought Cardiff-based Gardners from Hexcite in the administration sale, in a pre-pack arrangement with Kroll. PFI had also bought Kesslers and its global visual merchandising services brand Proportion London from Hexcite at the start of 2022.

Kesslers had an estimated total deficiency of more than £17m when it went into administration.

Gardners generated £11.8m in revenue in the 12 months to 31 December 2021. Its 102 staff all transferred to PFI Group as part of the deal.

The report also detailed the circumstances leading up to the company being placed into administration, stating: “The company had historically been profitable; however, it lost a profitable account prior to Covid and struggled to replace the lost revenue with contracts of a similar level of gross margin following the easing of Covid restrictions.

“In early 2022, the company's profit margins came under further pressure from inflation, supply chain issues and labour challenges, which impacted the company's cashflow.

“The company developed a turnaround plan in mid-May 2022 with the focus on improving operational efficiency and reducing costs. As per the management forecasts, the company was expected to be broadly cash neutral in the second half of 2022 but required funding in order to continue to meet its liabilities as they fell due.

“Unable to obtain further funding from the secured creditor, the group or its shareholders, the company decided to appoint an advisory firm to review its short-term cashflow position and commence an accelerated sale process.

“Kroll had previously been appointed as administrators on Kesslers International Ltd in December 2021. Following this, one of the common directors, Andrew Ducker, approached Kroll for advice on the company's financial position and the options available.

“Kroll were formally engaged on 27 June 2022 to provide advice on the company's current financial position and review its cashflow, the options available to the company and commence an accelerated marketing process to attempt to find investors or a purchaser for the company and/or its business and assets.

“Kroll worked with the management of the company to collate information required to commence the sale process, with a teaser document being issued to interested parties on 1 July 2022.

“An initial offer was received from the purchaser on 14 July 2022, for certain assets and following negotiations and discussions with the purchaser, the company, and the secured creditor, a final revised offer was received on 29 July 2022. This offer was accepted, subject to contract, and the solicitors were instructed to prepare the APA.

“The sale transaction was completed on 5 August 2022 to the purchaser for the total cash consideration of £100,000 for the assets of the company.”

Michael Lennon and Phil Dakin from Kroll were named in the report as the joint administrators.

The exit route out of administration has been left open, the report added, “as it will depend on the asset realisations, however, at this stage dissolution is the most likely exit route”.

The report also said that the administrators have requested that the directors provide a statement of affairs, but that to date this has not been received, due to the short time between the appointment date and the issuing of this report.

It said certain information has been extracted from the company’s books and records, the joint administrators have not carried out any audit or detailed verification work on the information provided, and the figures do not include the costs of the administration.

“The actual level of asset recoveries and claims against the company might differ materially from the amounts included in the financial information in this statement,” it added.