Meanwhile, as “unsecured creditors”, the independent companies that supplied the firm are the last to be paid, and were pushed “further down the pecking order”, according to Martin McTague, national chair of the Federation of Small Businesses. Paperchase’s suppliers were particularly badly hit because of reforms in December 2020 that changed the order in which creditors are paid, to prioritise HM Revenue and Customs. Liz Faulkner, left, and her sister, Cat, of Jelly Armchair were among the artists on the brink of going under. In Paperchase’s case, the buyer, Permira Credit, had been an investor for several years one of the directors linked to the old business – the chief executive, Oliver Raeburn – is involved in the new venture, and much of the stock was carried over. They are particularly controversial when parties connected to the failed business buy the assets of the old firm, because this allows them to wipe out the money they owe while in effect continuing to trade as the same company. While pre-pack administration deals like the one involving Paperchase can be a way of saving struggling businesses and making them viable again, critics say that they can be abused to offload debts. “When are you going to pay all the small businesses you owe thousands of pounds to?” one person wrote. After artists spoke out via Instagram, the company’s account was flooded with comments urging the stationer to “pay your suppliers”. The treatment of Paperchase’s suppliers has led to calls for a boycott from some customers. Sarah Ray says artists like her are ‘just expected to take the hit’. But we’re just expected to take the hit, and who cares? It feels like they certainly don’t.” “There’s less there for the family, and with living expenses going up, it’s a worry,” she said. The financial blow for her business – £9,000 – meant she had to use personal savings to plug the gap. It has instructed advisers to manage the sale after receiving a number of “unsolicited inquiries” from potential buyers, according to Sky News, following an improvement in its performance.Īnother supplier, Sarah Ray, 40, said it “doesn’t feel fair” that the company is now being sold on. In the latest twist, the new owner, Permira Credit, which is linked to a multibillion-pound private equity firm, is now said to be selling Paperchase. “I was thinking I’d just hold out because I might end up getting something. “I couldn’t risk that happening again, so I refused,” Chick said. Though some were initially offered a proportion of the money after the administration was announced as a “goodwill gesture” – in Chick’s case 15% – she says the offer was conditional on them working with the new owners. Photograph: Jelly ArmchairĬhick, from Portsmouth, is one of a group of artists from across the UK calling for increased protection for small businesses after they were left bruised – and in some cases facing bankruptcy – by the financial collapse of Paperchase last year. Liz and Cat Faulkner of Jelly Armchair are two of the artists joining Angela Chick in fighting back. “Nothing changes in the shops it’s still the same Paperchase.” “Most customers have no idea,” she added. Somebody’s making money off these, but I haven’t.’ “I was going through this, and having people sending me photos of my cards still in their stores that were available for sale. ![]() “I’m really pleased to say that the sun has been shining on us and we’re currently trading above plan,” Paperchase’s head of brand told a trade publication last May.įor Chick, it has been “immensely stressful”. Within months, business was reported to be booming once again. It also bought about £7m worth of old stock, according to documents filed with Companies House, and went on to sell products that suppliers had not been paid for. The controversial rescue deal enabled many stores to stay open and saved about 1,000 jobs, but it allowed the new owner in effect to shed millions of pounds in debts to suppliers, many of them small firms. Shortly after going into administration, the chain was bought by the credit arm of a private equity firm. ![]() But while she and other artists continue to struggle, Paperchase stores are trading and thriving, albeit with a new owner. Sixteen months on, she is yet to be paid – and the chance of her ever recouping more than a tiny percentage of the money is slim. ![]() ![]() Angela Chick says her cards are still on sale at Paperchase, but she makes nothing from them.
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