Perth printer Picton Press, which went into administration six months ago owing $9 million, including $2.2 million to unsecured creditors, is back in business under existing owner/directors Dennis Hague and Gary Kennedy after the signing of Deed of Company Arrangement (DOCA).
| Picton Press, Cleaver St, West Perth, WA
Under the DOCA put together by administrator Jeremy Nipps of Cor Cordis, major unsecured creditors owed in excess of $10,000, which included major paper suppliers, ended up getting just 1-2 cents on the dollar. Unsecured creditors owed less than $10,000 were expected to get up to 100 cents in the dollar.
'Good result': Jeremy Nipps,
Secured creditors - including Westpac, NAB and the CBA - who are owed a total of about $5.5 million, are not bound by the DOCA but agreed to continue their support of the business.
“There has been pain felt by some but the DOCA is now signed and, in the circumstances, the result is a good one for creditors,” said Nipps, who oversaw the company’s operations after it went into administration in May 2018. “Employees are happy because they’ve got some certainty going forward. In terms of the company continuing, they’ve got directors who are completely invested in the process because they need to be to make it work.”
As part of the deal, owners Hague and Kennedy have to pay $205,000 to a creditors’ trust within a month, with another payment of $270,000 due in a year’s time.
“It’s a better day than it’s been for a while but there are still crocodiles in the water,” Picton co-owner/director Gary Kennedy told Wide Format Online. “It’s been hard work but we’re glad the process is over. The business is back in our hands and we have some control of our destiny. We’ve got the most modern plant in WA so we’ve got efficiency; our catch was that the volume diminished, exposing our capital.”
Kennedy said the restructured company would now set about winning back trust in the market.
“We’ve got a fair amount of rebuilding to do, and we have trust and confidence to rebuild. We recognise that we overcapitalised in a diminishing market and a poor economy but we’ve rectified what we needed to rectify. There’s quite a few things we will do differently, and now we’ve just got to get up and running.”
| 'We have learned a lot': Gary
Kennedy, director, Picton Press
He dismissed reports that paper suppliers would be reluctant to continue doing business with the company.
“That’s the market talking with self-interest,” Kennedy said. “We’re okay on that front. The market has been very hard on us but we’re okay on that front.” He declined to say where Picton would be getting its paper. “There’s really nothing much more to say. Supply is okay.
“The future looks hard, as I think it does across the industry at the moment, but it certainly looks a lot more positive than it has. We have learned a lot. It’s a good day.”
Nipps said he found no evidence of wrongdoing at Picton, more a lack of financial management skills.
“There hasn’t been any intentional defrauding of the system, that certainly has not been the case,” Nipps said. “The company’s gone through a bit of a restructure and we’ve been able to educate them in a better understanding of systems of business management. Another consultant has been introduced to assist with general management issues like cash flow and forecasts, and they’ve added an accountant.”
“The financial controls that we’ve brought in will give the directors a better insight into their financial affairs, just another level of, perhaps, sophistication, which they can then utilize as part of their process.
“It will be a transitional phase now, closing up accounts that administrators are liable for, and obviously it’s all about moving forward with the company having the support of its customers and employees and suppliers. We’ll be monitoring the fulfilment of the terms of the DOCA.”
Nipps said he does not expect major creditor the ATO – owed $1.3 million - to push ahead with its earlier threat to wind up Picton.
“I can’t answer for them but the meeting of the creditors decided that the company should continue, and commercially it makes sense for the creditors as a whole.
“If the company went into liquidation and was wound up, you’d potentially have employees that might have claims in the realm of $600,000 and that’s potentially money that the government might have to pay through the Fair Entitlements guarantee. And, again, that’s a further impost on taxpayers. It’s not about just one individual creditor. My assessment was about what's best for all creditors.”
About 24 current staff members will retain their jobs under the agreement.
Picton Press has grown from a three-man operation in 1988 to become one of Perth’s largest print companies, with prepress, digital, offset and binding departments serving high profile clients including Coles and Woolworths.