East-London-based Capital went into administration last Thursday (26 June) with insolvency practitioner Begbies Traynor.

Suppliers and employees have said they were told prior to the company's fall that the reason it was struggling to make payments was because the London Development Agency (LDA), which was compensating Capital for moving out of the Olympic zone in July 2007, owed Capital in the region of £3.5m.

However, the LDA has denied this and said that full and final payment of compensation to Capital, which is believed to have been as much as £12m, was completed in the first week of June.

PrintWeek was contacted by several members of staff, who said that they were told "the bank had pulled the plug" on Capital.

Staff were informed that the LDA still owed the company more than £3m, which was the reason wages had not been paid.

And these claims have been backed up by several suppliers that have been in contact with PrintWeek since the administration.


Suppliers asked for support
Laurence Roberts, managing director at Agfa UK, said: "I got an email from David Gill saying 'I can't pay you for May, but we'll have the money we're owed from the LDA on 28 June.' We put him on stop and said when you pay we'll let you have some more plates.

"He didn't specify the amount - only that he was owed money by them and that's why he had a bit of a cash flow problem and that's why he couldn't pay May but he'd pay at the end of June."

Another supplier that was told a similar story is Colin Bailey, sales director at Colt Staplers, he told Printweek: "We had 90 days money outstanding and David Gill telephoned and informed me that due to the LDA not paying the larger amount of the money owed to them, some £3.5m he said, they were not in a position to pay us any money at this time.

"He asked if we could give Capital some help during this difficult time by still supporting them and supplying them with goods. David stated that they had started legal proceedings against the LDA for recovery of the money owed to them and they had until the 30 June to pay up, otherwise Capital was going to go to issue a high court writ for recovery of the money.

Bailey added that his company delivered £6,500 worth of goods to Capital just 24 hours before it went into administration.

One of the company's packaging suppliers, who wished to remain nameless at this time, added: "I went in and saw David Gill, he showed me some emails from solicitors showing that money was still owed. He said he would have the money by 4 July."

However, a spokesman for the LDA told PrintWeek: "Payments to Capital began in late 2006. Final payment, which consisted of around 20% of the total compensation package, was made in the first week of June 2008.

"The compensation was channelled through ours and Capital's solicitors and everything has been documented."


Capital staff praised
However, not all suppliers were told that the LDA was responsible for Capital's troubles.

Simon Biltcliffe, managing director at print manager Webmart, said: "We were prescient enough to have all our clients stock removed from Capital before they went into administration and we took the decision to move despite being assured by David Gill there was no problems and that they now had all the LDA payments.

"We were very grateful to our account managers at Capital who despite things falling apart around them, remained loyal and helpful to us until the very end- it's a measure of the people that Capital employed."