Direct mail specialist Karran suffered a loss of 228,000 in July due to the cancellation of a contract from a motor manufacturer and two jobs that were postponed from the summer to this autumn.

The move has resulted in 37 job losses, bringing the total workforce to 49. Under the terms of the CVA, Guildford-based Karran will pay creditors 28p in the pound and the company is carrying forward around 700,000 of debt.

"We know that CVAs do not have very good track records but that is why we discussed it with our major suppliers and creditors first," said Karran director Sue Whitmore. "It is their goodwill that is key to making this a success. We are grateful to the suppliers but also sad to cause them to lose money."

Despite posting profits last year of 301,000, the company has been dealing with trading and cashflow difficulties for several years. Its general printing division Seven Corners Press has been incurring losses as a result of "the cut-throat nature of competition for printing business".

Its other division Karran Products designs and manufactures direct mail products using engineered cardboard.

Story by Philip Chadwick