In a scramble to find new buyers, the high street stationery giant Paperchase is lining up administrators. The retailer has placed professional services company Begbies Traynor on alert to tackle a potential insolvency.
Paperchase was still looking for a financially sound rescue package, and Begbies’ potential role reflected “smart contingency planning” in the event that it did not.
They stated that the likelihood of another pre-pack administration was rising. It was reported earlier this month that Paperchase had been put up for sale just four months after its most recent ownership shift.
Steve Curtis, a seasoned retail investor who has worked with Tie Rack and Jigsaw, acquired the chain in August. The accounting firm PricewaterhouseCoopers (PwC) is now holding an auction for it.
The deal last summer also included Retail Realisation, an industry advising company connected with Mr. Curtis and turnaround company Rcapital.
Begbies Traynor set to be appointed in administration
Paperchase underwent a pre-pack administration in January 2021, making it one of the many retail victims of COVID-19.
It currently conducts business from about 100 outlets, and Mr. Curtis was reportedly in support of an existing management plan to increase that number to roughly 150 in the upcoming years at the time of the most recent takeover.
Since Paperchase’s run-in with administration, Permira Credit, the previous owner, had made investments in executive recruitment, new retail openings, and Paperchase’s digital offering.
Nearly 1,300 people were employed by Paperchase at the time of its most recent near-insolvency, and the company operated out of more than 125 locations throughout the UK.
Its outlets included concessions in several Next locations as well as House of Fraser and Selfridges.
On Tuesday, it was unknown how many businesses and jobs may be in jeopardy due to an additional administrative procedure.
Given the difficult economic climate, the idea to increase the chain by 50% was a daring wager on the potential of the Paperchase brand and business strategy.
A number of well-known retailers, including Debenhams and the Arcadia Group empire, which owned Dorothy Perkins to Topshop, also went bankrupt during the COVID-19 crisis, including Paperchase.
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The Paperchase administrator emphasised the importance of seeking insolvency advice for struggling retailers. They highlighted that taking action early is crucial due to the wider range of available insolvency options.
This proactive approach could provide retailers with more opportunities to navigate financial challenges successfully.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.