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.