ICSM Stationery and Paper Industry Business News: the recent troubled history of Paperchase continues as administrators line up to take control and seek new owners

ICSM Stationery and Paper Industry Business News: the recent troubled history of Paperchase continues as administrators line up to take control and seek new owners

By Harry Mottram: Paperchase is once again on the brink of collapse after it became clear the retailer was lining up Begbies Traynor to oversee a potential insolvency process just a year after the high street firm narrowly escaped insolvency.

Sky News’ Mark Kleinman broke the news reporting: “City sources said that Paperchase was continuing to seek a solvent rescue deal, and that Begbies' prospective role represented ‘sensible contingency planning’ in the event that one did not materialise. A further pre-pack administration was now increasingly likely, they added. Earlier this month, Sky News revealed that Paperchase had been put up for sale just four months after its latest change of ownership. The chain was taken over in August by Steve Curtis, an experienced retail investor who has been involved with Tie Rack and Jigsaw. It is now being auctioned by PricewaterhouseCoopers (PwC), the accountancy firm.

Ian Carrrotte of ICSM Credit said: “It is sad to see the demise of Paperchase but our main concern is for the suppliers some of whom won’t get paid if they go into administration. Our intelligence suggests there are some suppliers who are going to take a big hit if they go under. The fact is  Paperchase’s problems set in long before Cost of Living Crisis came along.”

He said the firm had a long history of money problems. Founded by two art students in 1968 the firm grew to employ 1,500 staff and more than 100 stores. But as it grew so did the problems as shopping habits changed. W H Smith came to its rescue in 1985 and in 1996 it became Paperchase Products after a management buyout before in 2004 Borders took control. Three years late they sold a stake to Risk Capital for £10 m. There were more problems in 2009 when Borders collapsed but HMV and Waterstones were amongst stores to offer Paperchase concessions in their shops in 2010 following a management buyout with Primary Capital Partners taking over the business.

Since then Primera Capital through a legal entity, Aspen Phoenix Newco Limited, acquired the stationery chain but they clearly have found it hard to turn the business around. There is now a doubt over the future of the remaining 100 or so stores and its 1,300 staff. The situation is very different from when Primera Capital took on the enterprise as there were plans on growing the business by opening new stores.

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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk


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