Marchant said he would "enthusiastically join any campaign that forces merchants to declare and defend a policy that rejected phoenix companies".

"There are few enough merchants now in the National Association of Paper Merchants (NAPM) to make this work," he said.

If the company has been a significant customer and was willing to repay in full all of the debt, Marchant said merchants could deal with them.

"Even if the phoenix company is not a customer of ours we will not supply, as most of them go on to fail again," he said.

Marchant said he was well aware how the irresponsible behaviour of phoenix companies could force other printers and customers into financial difficulties.

"There is a huge misconception that merchants are just sitting back waiting for the insurers to payout, which is not the case," he said.

The Robert Horne Group took in 3m of bad debt last year, according to Marchant, who said that insurers had recovered less than 400,000 of that figure to date.

"This will leave us with a 2m net loss and a serious commitment to any initiative that aims to reduce bad debt," Marchant said.

In response to price increases, he said that with the pulp price on the floor, the real price of paper was at an all-time low and needed to be corrected.

"To do so the price has to be driven by the merchants. If it were not, many other companies could be joining Papyrus and Capital Paper and closing their doors for good," said Marchant.

Story by Andy Scott