The revelation was included in the latest progress report from administrators Zelf Hussain and Peter Dickens at PricewaterhouseCoopers (PwC), who are handling the administration of Polestar UK Print (formerly Prospect Bidco), the vehicle that acquired Polestar in a pre-pack deal in March 2016 before going into administration itself just a month later.
PwC stated that as part of the realisation of the company’s assets, it instigated legal action against publisher Northern & Shell over a “significant debt” of £1.7m.
In January 2016 Polestar began printing for Express Newspapers, which is owned by Northern & Shell, under a new three-year contract for magazines and newspaper supplements, involving more than 125m magazines a year.
“Legal proceedings were issued in order to recover this debt, but the claim was settled out of court for a value of £1.3m,” Dickens reported.
PwC said the discounted sum took into account amounts due in relation to contractual set-off.
Northern & Shell had not commented on the matter at the time of writing.
As part of the pre-pack purchase Polestar UK Print had acquired “the right and title to inter-company unsecured claims within the insolvent group”, and as a result of this the administrators also brought in £800k via two £400k payments from the administrations of ‘Old Polestar Group’ companies: the old Polestar UK Print and the old Polestar Bicester.
PwC said its bill for dealing with the administration was now expected to be £1.3m higher than the initial estimate, at £4.7m. However, the firm said that its work had resulted in book debt recoveries that were £3.5m greater than the estimate in the directors’ statement of affairs, as well as the £1.3m Northern & Shell claim and £800k from the Old Polestar Group companies.
Legal firm DLA Piper was appointed to handle the Northern & Shell claim due to its industry expertise, at a cost of £107k. Coincidentally, the firm had been owed £154k by the original Polestar UK Print at the time of the pre-pack.
Polestar UK Print had an estimated deficiency of £31.7m relating to non-preferential creditors, and a total estimated deficiency (including £37.4m owed to floating charge holders) of £69.1m.
PwC said it still needed to resolve a number of matters including VAT refunds for the pre- and post-insolvency periods, and overpayments for licence to occupy paid to the administrators of the Old Polestar Group (that administration is being handled by a different team at PwC).
It will also pay out a dividend to unsecured creditors from the £600k ‘prescribed part’ that has been set aside for those creditors, who are expected to receive less than 0.5%-1.85% of the amounts owed.
The administration period has been extended to 24 April 2018.
