Paperchase’s unsecured creditors to receive meagre payment
Unsecured creditors to Paperchase will receive between 1 and 4 per cent of the £22.6m they were owed following the stationary retailer’s pre-pack administration.
The retailer was sold through a pre-pack administration to Permira Debt Managers, which provided funding for the business since 2015.
Unsecured creditors will be paid a dividend out of the retailer’s property value of £5.83m, according to a recent administrator report by PwC.
PwC is owed £22.6m but is unlikely to get back more than 4p for every pound owed, The Telegraph first reported.
HM Revenue and Customs has been paid in full, thanks to government rule changes.
What’s more, Paperchase’s secured creditors, Lloyds and Permira, were paid their owed sums of £400,000 and £56.4m respectively.
Just over three quarters of the retailer’s 125 shops were saved alongside 1,000 out of 1,278 employees by the arrangement.
Paperchase was bought back by Permira with a £40m credit bid through Aspen Phoenix Newco. This meant the amount owed was reduced to £15.2m with PwC administrators working to recover the rest.
The retailer struggled without the lack of its usual customer base of customers purchasing greeting cards in shops at train stations.
Permira did not refer its acquisition to the “pre-pack pool”, an independent body created to oversee restructurings where assets are sold to connected parties.
The debt management firm bought around £7m worth of Paperchase stock but it took three months to get the stock out of closed shops because of lockdown restrictions.