A creditors meeting has agreed to a proposal that would allow WA printer Picton Press - which went into administration in May owing $9 million - to resume operations under owner/directors Dennis Hague and Gary Kennedy despite major unsecured creditors getting only 1-2 cents on the dollar in the deal.
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| Picton Press, West Perth WA. |
Administrator Jeremy Nipps of Cor Cordis was appointed to run the business five months ago after the Australian Taxation Office (ATO) launched court action to recover a debt of $1.3 million.
The ATO, an unsecured creditor along with several paper merchants, is set to receive just 1-2 cents on the dollar under a Deed of Company Arrangement (DOCA) that was approved in a vote at a creditors’ meeting in Perth on Thursday.
“Like all creditors they were a bit concerned, but at the end of the day they do get some return,” Nipps told Wide Format Online. “They were looking down the barrel of receiving absolutely nothing in a liquidation.”
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| Picton's Dennis Hague & Gary Kennedy |
Under the DOCA that was also approved in a separate meeting of Picton employees, unsecured creditors owed less than $10,000 are expected to get up to 100 cents in the dollar, but those owed in excess of $10,000 will receive just 1-2 cents in the dollar, based on current estimates.
Secured creditors - including Westpac, NAB and the CBA - who are owed a total of about $5.5 million, are not bound by the DOCA but have agreed to continue their support of the directors to allow the business to continue to trade.
About 24 staff current staff members included in the agreement will retain their jobs. “The employee claims are under $100,000,” said Nipps. “About 24 staff remaining in the business and some other staff who have moved on to other jobs are included in the DOCA and they won’t lose out on any money. They can take their leave when they need it and given the circumstances they’ve been through over the past few months, it’s a good result. They’re able to get some closure and they’ve still got a job and can look forward to supporting the company going forward.”
The agreement is a "very positive outcome" according to Nipps, who has overseen the running of the company for the past few months. “The proposal the directors put forward was essentially seeking a compromise of the creditors’ claims so the business could restructure its operations with a view to continuing to operate. Employees get to retain their jobs and the company continues to operate.
"From an overall perspective, the restructure provides a better return to the body of unsecured creditors to what otherwise would have been available under liquidation. It’s positive news for the company because it gives them the opportunity to continue trading and get back of their feet and hopefully going forward things will be bigger and better for them.
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'A good outcome': Jeremy Nipps, Cor Cordis. |
“It’s essentially a financial re-set. The same directors are in control and as much as a lot of people might look at the directors as the cause of the problem in some respects, they’ve proactively taken steps along the whole way to try to avoid something like this from happening again."
Owner/directors Dennis Hague and Gary Kennedy will continue running the business with all of their key personnel, including the general manager, said Nipps. “It has been operating under me and we’ve been trading positively thanks to the support of customers and the strength of the relationships the directors have with those customers.
“But once I’m out of there, hopefully those relationships can flourish a little more because some customers were a bit hesitant to provide work while it was under administration.
"The future looks bright, based on forecasts. You don’t know what’s going to happen around the corner in the market but there’s the potential for the company to keep trading positively. It’s a good outcome, without a doubt.”
Nipps expects the DOCA to be in place in about a week. “The next step is just the formalities; the administrators and directors signing off on the documentation, drawing a line in the sand to hand it back over to the directors, and administering the requirements under the DOCA proposal to ensure the directors make the payments that need to be made. It could be completed in less than a week.”
There has been no comment yet from the ATO or the paper merchants who will take the biggest hit under the agreement.
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Picton Press installs a KBA Rapida 10 Colour press in 2014. |
Picton Press has grown from a three-man operation in 1988 to become one of Perth’s largest print companies, with prepress, digital, offset and binding departments serving high profile clients including Coles and Woolworths.
