SBS fell into administration and ceased trading with the immediate loss of 55 jobs two months ago. Matt Ingram and Steven Muncaster of Kroll’s Birmingham and Manchester offices respectively were appointed joint administrators of Streamline Press Limited, John Baxter & Sons Limited, and Spectrum Printing Services Limited on 5 October.
The notice of statement of affairs in administration documents for the group’s three businesses, filed at Companies House, showed that at Streamline Press, unsecured creditors were hit to the tune of nearly £4.3m, including trade creditors amounts owing of over £1.7m. HMRC was owed nearly £450,000.
For Spectrum, unsecured creditors were owed over £2.7m, with trade creditors making up nearly £400,000 of this amount and HMRC owed just shy of £154,000. Highlighting inter-company dealings, Streamline Press was owed over £365,000 by Spectrum while John Baxter & Sons was owed nearly £308,000.
John Baxter & Sons owed unsecured creditors over £2.4m, with trade creditors owed over £287,000 and the HMRC owed over £105,000. Streamline Press was owed just over £315,000.
The notice of administrator’s proposals reports also detailed the circumstances leading up to the group being placed into administration, stating: “The group's management team completed a consolidation exercise over the course of 2022 to operationally restructure the business and bring the majority of operations into one location.
Accordingly, this resulted in the group being able to reduce overheads and deliver synergies. However, the impact of the unprecedented lockdown from March 2020 due to the Covid-19 global pandemic significantly affected sales revenue and a significant burden was placed on the group's cash resources.
“In addition, material prices increased significantly namely paper, ink and consumables. Due to a competitive market, the group was unable to pass on these cost increases to its customers.
“Ultimately the group did not have the cash resources to service the high levels of debt in the business, including the government backed loans it obtained during the pandemic, and to deal with the decreasing margins of the businesses.”
The administrators said each entity in the group was partially funded through separate invoice finance facilities with Close, while it had also utilised loans and held multiple asset finance agreements.
Kroll was engaged on 6 July 2022 “to undertake a high-level review of the group's current and forecasted financial performance to assess the options available to the group for a financial restructure of the businesses.
After concluding that sale options should be explored, Kroll was engaged by the directors “to conduct an accelerated sale of the group, including exploring a refinance of all/part of the group's existing debt”.
The group was marketed as a whole, with a targeted teaser document circulated to circa-185 interested parties around 22 July 2022. Such parties included potential trade buyers and parties in the private equity and distressed asset marketplace.
A total of 16 parties expressed an interest but no offers were received for the group or individual companies on a solvent basis.
“It was established that there would be insufficient working capital generated in the businesses to enable the proposed joint administrators to trade the business in the long-term without additional funds being injected into the group.
“In the absence of any other viable options, Kroll advised the group that a pre-packaged administration sale of the company's business and assets may maximise the realisable value of the assets, including the outstanding debtors' ledgers and outcome for the creditors.”
An offer was received from an unconnected third party for the business and certain assets of the Streamline business only, which included the TUPE transfer of the majority of the Streamline employees, however the buyer was unable to complete the transaction.
Kroll then recommended that the directors should place the group into administration, but established that there was merit in completing certain work in progress, “which would assist in preserving the outstanding book debt ledgers by minimising disruption to customers, mitigating disputes across the ledgers and maximising debtor collections post-appointment”.
Some of the work in progress was also sold to a third-party printer.
The group’s other major asset was its premises at 11 Boston Road in Beaumont Leys, Leicester, which Streamline holds on a long leasehold basis.
Independent property agent Avison Young has marketed the property for sale on the open market for four weeks at a guide price of £800,000. Boards have been erected on site and details have been sent to circa 1,000 parties from Avison Young's database. To date, 23 viewings have taken place and a number of offers have been received.
According to the group's books and records the outstanding debts due to Streamline totalled £1,861,376 on the date the administrators were appointed. The principal amount owing to Close under the invoice finance agreement was circa £1,327,913, prior to contractual charges and interest.
The outstanding debts due to Spectrum totalled £317,622, with the principal amount owing to Close circa £158,297, prior to contractual charges and interest. Finally, the outstanding debts due to Baxters totalled £146,693, with the principal amount owing to Close circa £85,884, prior to contractual charges and interest.
“On present information available, it is estimated that Close will be repaid in full under its fixed charge security from the debtor collections and that a book debt surplus will become available to each of the entities in the group, however the quantum and timing is dependent upon future collections and Close's final charges and interest,” the report stated.
