ICSM Business News: the advertising and marketing research outfit Communisis sees its parent company seek bankruptcy protection
By Harry Mottram: The parent company of Leeds based Communisis OSG in the United States has filed for Chapter 11 bankruptcy protection. OSG acquired Communisis in 2018 in a £153.8m takeover as the American company sort to gain a foothold in Europe as Communisis has branches across Europe and around the world.
Writing in the trade journal Print Week Jo Francis reported: “OSG cited a number of reasons for the Chapter 11 decision, including a malware attack in May 2021, which left it unable to service several clients ‘for a few weeks’, resulting in missed deadlines and service level targets. Many of the debtors’ [OSG’s] customers, particularly those in Europe, the Middle East, and Asia, shifted their orders to other service providers as a result of the malware attacks,’ OSG stated in the court document, with the business subsequently losing approximately $30m of sales in Q4.”
Somewhat alarmingly the OSG’s restructuring plan would see all general unsecured creditor claims either paid in full or reinstated in the post-Chapter 11 business. However, Print Week has reported the firm’s plans to reduce its $824m of debt to $690m in its proposals to trade out of Chapter 11 has hit a snag. The American equivalent of our Insolvency Service the United States Trustee Program initially objected to the plans on the grounds OSG has tried to circumnavigate the rules with concerns over the payment of creditors.
That brings us back to concerns over Communisis who have issued a statement as clearly, they do not want to be dragged into the problems of their parent company. In a statement, Communisis told Printweek that it was not impacted by the filing: “This relates to a pre-packaged recapitalisation process through Chapter 11 for OSG and certain of its US subsidiaries and does not include any Communisis entity.
“Communisis is not impacted by this filing, and nothing changes in respect of the day-to-day business of Communisis either for our clients, vendors, employees or any other stakeholders. Further, OSG expects the process to be swift and intends to emerge from the Chapter 11 process prior to the end of August. In its public filings, OSG has stated that this is the best option to deleverage its capital structure, extend the maturities under its funded debt facilities, recapitalise the businesses, and positions it for future success and growth.”
That will settle any concerns, but the fly in the ointment could have been the United States Trustee Program. INow they have given the green light to OSG’s proposals then all is well for Communisis.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk