A number of PaperlinX UK businesses have gone into receivership, with 693 of its 1,200 UK staff made redundant as well as the prospective closure of the company’s sites. Deloitte has been called in to administrate the businesses involved, and is looking to realise the value of the businesses stock and asset as well as prospective buyers for the businesses.
PaperlinX is an international merchant of fine paper, industrial packaging products and equipment, communication materials, and diversified products and services. The company, which is founded in 2000 and headquartered in Australia, operates in 20 countries, with its brand name ‘PaperlinX’ in the UK and Europe and ‘Spicers’ In Canada, Asia and Australasia.
As a result of the continued lower demand for paper and decline in margins in the UK, the company commenced a strategic review in December last year. In February 2015, PaperlinX provided an update on the review and outlined Underlying EBIT losses for the European business of €14.9 million, mainly due to a “shortfall in earnings from Commercial Print divisions in the UK and the Benelux.”
Now, a month later, it is announced that a number of PaperlinX UK’s businesses have entered receivership, including the Robert Horne Group, Howard Smith Paper Group, The Paper Company, and PaperlinX Services (Europe). The UK packaging businesses - Parkside Packaging, 1st Class Packaging and Donington Packaging Supplies – are not involved in the administration.
To oversee the administration, Matt Smith and Neville Kahn from professional services firm Deloitte have been appointed Joint Administrators. In a statement, Smith says: “The administration appointment specifically relates to PaperlinX UK’s paper and visual technology solutions businesses. The industry has faced an increasingly challenging environment due to falling demand as digital communications have increased. We are investigating how best to maximise value in the businesses for the benefit its creditors.”
The reality of the administration was delivered to the staff of PaperlinX’s affected businesses on the 1st of April. Whereby 693 of its 1,200 UK staff made redundant, as well as plans to close 14 of its sites disclosed, with many of its sales offices closed directly. “Employment specialists from the Joint Administrators team will be making sure affected employees are supported in making their claims to the Redundancy Payments Service for redundancy, pay in lieu of notice and any other appropriate claims. A dedicated email address and helpline for employees has also been established,” explains Smith.
In a bid to realise the value of the businesses stock and assets, some of the businesses would continue to operate “on a limited basis”. With Deloitte looking for buyers for the businesses involved in the administration as well as the wider PaperlinX UK businesses not pulled into administration. PaperlinX wider operations in Ireland, mainland Europe, Asia and Australasia are unaffected.