Mitting's musings

January 2008 - Posts

• Is it time to act to tighten administration legislation?

  Administration is a sad inevitability of modern print in the UK. All too often companies have shaved their margins once too many and find themselves struggling to pay their creditors and, without the possibility of financial assistance, are forced to call in the administrators.   However, it is not just the company who suffer as suppliers also bear the brunt of any administration proceeding. Increasingly it seems, companies are being pre-packed or reinstated as Phoenix companies leaving the creditors out of pocket.   I spoke with Daniel Smith a print specialist at Grant Thornton about the pre-pack sale arrangement. He explained that administrators have a duty of care to ensure that the best possible result for everyone is achieved.   He added that at Grant Thornton, a pre-pack sale is only ever exacted under exceptional circumstances where running the business for enough time to find a buyer would be of further detriment to staff and suppliers.   But are all administrators as thorough and responsible as Grant Thornton and does the law sufficiently cover the risk that suppliers take? No administration proceeding will deliver total results for all parties, if that was the case the company would not need to call the administrators in.   However, my concern is that it is getting easier for companies to use administration as a quick-fix in the same way that IVAs are wreking havoc on the personal finance sector. The government must act now to tighten legislation to ensure that during this difficult year pre-pack sales and Phoenix companies do not compound the difficulties the industry already faces.   Posted Jan 31 2008, 12:18 PM by William Mitting with no comments

• It's not all doom and gloom...

  Recent closures have painted a bleak picture of the print industry’s prospects for 2008. But, as it is Friday, I thought I would bring some good news courtesy of an interesting study by Begbies Traynor which reveals that all may not be as bad as it seems.   The Red Flag Alert statistics for Print & Packaging 2007 report assesses the financial insecurity of companies in a range of sectors. It identifies companies with “significant” problems, and those with “critical” problems, namely a CCJ totalling £5,000 or more and/or a Winding-up Petition related activity.   Certainly some of its findings are not encouraging. It found that the number of companies in the print and packaging (P&P) sector with critical problems rose from 85 in 2006 to 99 in 2007, with November 2006 recoding the highest number of companies slipping into “critical” over the past two years (26).   However, a comparison with other sectors puts this in comparison. Of the ten main industries covered, print had the lowest percentage of companies with “critical” or “significant” problems with only 2% of companies in each of these categories.   Construction fared the worst with 12% of the companies in that sector having “significant” problems and 20% “critical”. The study also found concerning statistics in the retail and manufacturing sectors.   Without a doubt this is going to be a tough year and the signs are already evident that consolidation is here and it is going to be painful. But these statistics go a long way to showing that all is not as bad as it may seem.   Posted Jan 18 2008, 11:55 AM by William Mitting with no comments