Paperchase insolvency fears grow

Retailer still for sale with a second pre-pack administration deal being mooted

 

Paperchase is believed to be lining up corporate recovery firm Begbies Traynor to oversee a potential insolvency process even as the greeting card and stationery retailer continues to seek a solvent rescue deal.

Sky News revealed at lunchtime today, 17 January, that the move at the High Street chain follows last week’s news of being put up for sale just four months after its latest owner took over.

Sky News city editor Mark Kleinman reported he learnt the retailer, which current owner Steve Curtis has asked PricewaterhouseCoopers (PwC) to auction, has put professional services firm Begbies Traynor on standby to handle a potential insolvency.

Above: The 2021 pre-pack administration deal sparked Joe Lycett’s TV show
Above: The 2021 pre-pack administration deal sparked Joe Lycett’s TV show

City sources said Paperchase was continuing to seek a solvent rescue deal, and that Begbies Traynor’s prospective role represented “sensible contingency planning” in the event one did not materialise.

A further pre-pack administration is now increasingly likely, the sources told Sky News – the same process which left greeting card publishers thousands of pounds out of pocket in January 2021 when product they had supplied was not paid for but was kept by Paperchase and sold through stores under the new owners Aspen Phoenix Newco Ltd, a legal entity of Primera Capital.

That led to comedian and activist Joe Lycett taking it to task on his TV show in December, and selling his own greeting cards designs which raised £17,000 that he gave to three of the artists collectively owed £60,000 – Bow & Bell, Angela Chick, and Jelly Armchair – who appeared on the programme.

Above: Paperchase currently has around 125 stores and concessions
Above: Paperchase currently has around 125 stores and concessions

Joe stressed in the show: “We have to make clear that this is all entirely legal, and did keep Paperchase trading. It’s a kick in the post-its to our artists though, who saw their work sold in Paperchase and Aspen Phoenix Newco Ltd has banked the money while they still hadn’t been paid in full.”

Other affected publishers, including Dandelion Stationery, have been pushing the issue with Hole In My Pocket’s Allistair Burt telling PG Buzz that there is currently an investigation under way because there are rules in these situations, and that some have engaged companies to ensure all those rules were met.

Above: Comic Joe called out Paperchase on TV
Above: Comic Joe called out Paperchase on TV

Yesterday, 16 January, Allistair added: “It’s a shame – I love the brand, I love the shops, I love the buyers, but they’re all suffering because of the higher-ups who haven’t done the right thing. If our investigation succeeds, it will be the directors who were then in charge who will be found to be personally liable.”

Steve Curtis is an experienced retail investor who led investments in chains such as Tie Rack and has been an operating partner at turnaround firm Rcapital and, reporting on Wednesday, 11 January, Sky News said he is understood to be seeking to close a sale in the coming weeks as “several sources said an insolvency process may be required to expedite a transaction”.

Above: Bow & Bell, Angela Chick, and Jelly Armchair appeared on Joe’s show
Above: Bow & Bell, Angela Chick, and Jelly Armchair appeared on Joe’s show

PwC brokered the deal which saw Steve Curtis and industry advisory firm Retail Realisation, with which he and Rcapital are affiliated, take control in August 2022 when there were 96 standalone shops and 32 concessions in House Of Fraser, Selfridges, and Next, and the new owners were believed to back an existing management plan to work towards increasing that to approximately 150 stores.

Top: Paperchase is in trouble again

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