PAPER maker Tullis Russell owed more than £50 million when it collapsed with the loss of hundreds of jobs earlier this year.
According to an update from administrators at KPMG, after money due to the Fife-based company by customers has been recovered and assets such as land and equipment have been sold, there will be an estimated shortfall owing to creditors of some £37.5m.
The employee-owned company collapsed in April after being hit by factors including weak global demand for printed materials, rising raw material costs and strengthening of sterling against the euro.
Those owed money include the company’s 474 employees who were due a total figure of £18.4m – an average of almost £39,000 – including payments for holiday entitlement and redundancy pay. Although employees will receive a legal minimum level of redundancy pay, it is unclear yet what proportion of money owed under the enhanced redundancy terms in place at the company they will eventually receive.
Discussions over a potential rescue of the firm’s defined benefit pension scheme, which had a deficit of some £15.7m, are also continuing.
Administrators Blair Nimmo and Tony Friar of KPMG said at this stage they anticipate that unsecured creditors will receive some payment for money owed.
“However, the amount and timing of such a dividend is currently uncertain,” they pointed out.
There are more than 250 unsecured creditors of the firm, including six who are owed more than £1m each. As well as raw material suppliers, creditors include Fife Chamber of Commerce, Fife Council and Forth Ports. A number of small businesses were also left out of pocket, including taxi firms and newsagents. Water supplier Business Stream was owed some £74,000.
At the time of administration, the company was owed some £16.9m by more than 300 individual customers. The report said that the inability to complete certain orders due to the administration had made the collection of debts more challenging. To date, around half the money owed has been recovered.
“We will continue to pursue all remaining debts, via the legal process if necessary, and whilst it remains cost-effective to do so,” said the administrators.
Tullis Russell Papermakers collapsed in April after racking up losses totalling £18.5m over the last five years. In the year to 31 March, 2014, it sold 126,000 tonnes of paper and board and recorded a turnover of £124.6m, but suffered a pre-tax loss of £3.4m.
Steps had begun last year to find a buyer for the employee-owned firm, which was founded 206 years ago, but these proved unsuccessful with more than 70 competitors rejecting opportunities to buy the firm.
When administrators were appointed, 325 employees were axed with immediate effect. The remaining workers were retained to complete a number of orders and help with the administration process. That number has fallen to around 70 currently and is continually reduced as the company is wound down.
Glasgow-based Metis Partners is marketing the firm’s intellectual property assets.
“Both businesses had market-leading positions and have established globally recognised corporate and product brands,” said Metis head of corporate recovery Nat Baldwin.
He said awareness of the brands extends internationally, with the company selling to more than 120 countries.
Assets for sale include goodwill in more than 70 corporate and product brands, 200 registered trademarks, customer information and 80 domain names.