However, a lack of due diligence in its acquisition of Aldridge Print Group appears to have been the root cause of the cashflow problems that led to the group’s insolvency, according to financial experts.

The directors’ main criticism of Close was its alleged unwillingness to fund APG’s clients following Blue’s purchase of the insolvent printer via a pre-pack deal.

This was said to result in unfunded sales reaching £800,000 by December 2011, ultimately leading Blue to switch finance providers, although its new bank was said to be even more reluctant to advance any funds.

However, the directors appeared to tacitly admit a lack of due diligence in relation to APG, whose sales turned out to be well below their expectations post-acquisition.

Blue cited a "lack of sales against the overly ambitious projections submitted by APG" for redundancies made at the Mitcham site, the cost of which it had to meet. Actual sales were said to be around £4.25m/yr versus a forecast of £9m/yr.

The company also admitted not having discussed the acquisition with Close prior to completing the deal, which administrator Tony Murphy identified as a potentially fatal error.

He told PrintWeek: "The first thing I would do when buying a business is tell my funders about it, if only to check that they will be able to fund the work from the new business.

"There are a number of reasons why a funding house would not want to do it. There may be a different type of creditor, perhaps not as safe, or it is possible that they have dealt with the company before and don’t want to go back."

Gerry Hoare, director at print finance broker Deal Bureau said that the directors had been naive in their approach to the APG acquisition. "Those types of acquisitions are always sold with the caveat there are no warranties and it is up to the buyer to have done their own due diligence," he said.

"Making an acquisition of this size, they should have spoken to their funders as soon as they decided to proceed. The funders would have been able to look at the sales ledger and provide a view on what would be fundable or not. It might have highlighted possible bad debts or other issues."

Close refused to be drawn on Blue’s claims, although managing director Basil Bannayi told PrintWeek: "We are entirely satisfied that we took appropriate credit decisions throughout our relationship with Blue based on the information available to us."