Lock down on 23rd March and liquidation on 24th as Fox's lease expires

Tunbridge Wells print and marketing outfit Fox Marketing Services MC have gone into voluntary liquidation soon after the firm’s lease ran out.

The company said the landlord included a dilapidation order (a dilap) which would have meant they could no longer afford to trade. Writing in the trade publication Print Week Jo Francis reported: “Fox Marketing Services MC has gone into voluntary liquidation after being hit with an unexpected property lease issue just as the coronavirus crisis resulted in a dramatic drop-off in order levels."

She reported the firm had seen a drop in sales of over 85% due to the coronavirus outbreak but previous to the crisis the litho printing wing of the firm had recorded sales of around £9m.

The managing director Kevin Stanton described the situation as ‘the saddest moment in my working life’ said Francis. She continued: “He said that Fox Marketing Services MC had been hit by a triple-whammy that had proved too much for the firm to continue trading.”

In a letter that Print Week have seen the MD wrote to the staff to give some background. Jo Francis reported: "Stanton explained that a new lease on two business units had been agreed in May 2019, but 'due to delays from the landlord, they were not signed prior to the lease expiring. During the last month of the lease, we were advised that the landlord wanted a huge amount of money for dilapidations for the unit that we were moving out of and had also made plans to install a new roof [on an existing unit].' He said the financial implications of the dilapidations alone would have been very damaging to the business, but the roof issue would have made trading “'difficult if not impossible'”.

She continued: "The firm’s existing lease expired on 24 March. Fox Marketing Services MC had also been dealing with a drop-off in litho volumes, with customers switching some work to digital channels or other printers. He said unfolding events around the Covid-19 pandemic had proved to be 'the killer blow'. And: 'With a huge amount of our sales coming from the travel industry, it was inevitable that we were going to struggle to generate revenue throughout the pandemic but a drop in sales of over 85% is simply not sustainable. Clients have stopped placing orders, are cancelling orders and are delaying payments of invoices. This has had a huge impact on cash flow and I personally guaranteed the payment of the wage bill for March 2020. The circumstances that we find ourselves in are unprecedented and are due to external factors beyond anybody’s control.'"

However questions have already been raised by readers of Print Week in their comments section over the reasons behind the collapse and the fall out which could leave creditors high and dry. One anonymous correspondent alleged insolvency practitioner of MFW Insolvency & Recovery’s Mark Willis was a ‘very close friend’ of Kevin Stanton.

Another wrote: “Dilaps can always be contested and negotiated. Coronavirus is NOT an excuse for not paying invoices - the debts must be taken up legally.”

While another implied the use of MFW Insolvency & Recovery services was ‘very cosy.’

Although it should be said that when a firm collapses outsiders often judge the situation without the full facts and there is nothing here that suggests anything other than a perfect storm that has led to the liquidation.

Ian Carrotte of ICSM Credit said that it was no surprise that firms were going to the wall due to the coronavirus crisis but using the emergency as an excuse to not pay suppliers was wrong.

_{Ian Carrotte}

He said: “Firms can apply for the Government’s furlough scheme to pay wages and there is no reason that a tenant cannot negotiate a delap with their landlord so it is not a surprise this case has raised eyebrows. My concern is for the staff who have been laid off and will have to apply for statutory redundancy pay and the suppliers who may or may not get paid what they are owed.”

Ian Carrotte also commented on Jo Francis’ report quoting Stanton saying: “Clients have stopped placing orders, are cancelling orders and are delaying payments of invoices. This has had a huge impact on cash flow and I personally guaranteed the payment of the wage bill for March 2020. The circumstances that we find ourselves in are unprecedented and are due to external factors beyond anybody’s control." He said he had sympathy for anyone facing cash flow problems caused by the emergency but to give up on chasing overdue invoices was not the answer.

“All companies will have a ledger listing outstanding invoices for clients,” he said, “almost all will be able to pay in part or full the amounts owed. Use ICSM Credit’s free legal letters or our debt collecting services to get the cash owed into your bank account. Despite the shut-down we are finding firms are still paying their bills and trading at a reduced level - as long as they are chased using ICSM Credit.”

Print Week said: "Fox Marketing Services MS employed around 60 staff and ran a five-colour plus coater Speedmaster XL 106 plus bindery and finishing kit. Employees were informed that their roles were redundant with immediate effect, as of 14 April. Fox Group services include high-end printing, direct mail, merchandise, and storage and fulfilment. The group won Printweek’s Customer Service Team of the Year accolade at last year’s Printweek Awards, which Stanton described as “one of the many highs” that he was incredibly proud of at the business, as he thanked employees for their hard work and dedication.

"Sister business Fox Managed Solutions, which operates from a separate unit and includes print management and direct mail, continues to trade and is not part of the liquidation. However, most of its 27 employees have been furloughed due to the virus crisis and the firm is operating with a skeleton staff."

ICSM Credit

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

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