The long running attempt to keep embattled Perth printer Picton Press afloat is over, with its own administrator torpedoing the company by organising a creditors' meeting, which voted for liquidation.
The creditors responded to the invitation from Cor Cordis by overwhelmingly voting to send the company – which has debts topping $10m – into liquidation.
The end came 15 months after Picton first went into administration, and ten months after the controversial DOCA - which so outraged the Perth print community and the Australian Tax Office - was enacted.
The creditors' meeting voted 41 to two in favour of pushing Picton over the edge, with five abstentions. Directors Dennis Hague and Gary Kennedy were in attendance, but did not speak. The administrator said that the company was trading at a loss and could not continue.
During the course of the creditors' meeting, the administrator said that any unpaid invoices during the period of administration would now join the unsecured creditors list.
Hague and Kennedy face a difficult time ahead as secured creditors call in their debts, which are running to the tune of $6.8m and are secured against various properties and equipment. Unsecured creditors are looking at not much more than zero cents in the dollar for the $3.5m owed, as any existing assets will go towards paying off first the liquidator, then the staff, then the ATO.
Ironically the KBA ten-colour B1, which was installed just as the WA economy tanked, leaving a large and growing gap between capacity and throughput which contributed to the company's troubles, has now been paid off.
The vote to liquidate the company was one of two items voted on at the meeting, the other being a resolution to invite accountancy giant Ernst & Young to be liquidator in place of Cor Cordis, but that vote failed. The author of the resolution is unknown.
Picton's external accountant was at the meeting sitting next to the two directors, who have been at increasing odds with Cor Cordis all year, with the administrator accusing the directors of “unauthorised” activities and demanding the duo pay back $348,000 into the company, while Gary Kennedy was accusing the administrators of “overlooking their own shortcomings”, in the creditors' report that preceded the vote.
The mood at the creditors' meeting was one of resignation, as one attendee told Print21, “There are no winners in this.”
Picton first went into administration in May last year, as the company was unable to pay a $1.3m tax bill, with the ATO seeking a winding up order. The directors called into the administrators, who tried and failed to sell the business, then oversaw a controversial vote for a Deed of Company Arrangement (DOCA) which would have given unsecured creditors owed less than $10,000 100c in the dollar, but those owed more than $10,000 were to receive between 1c and 2c in the dollar. This category included the ATO and paper merchant Ball & Doggett.
Gary Kennedy told Print21, “The DOCA we proposed was a legitimate restructure which should have provided one hundred per cent return to seventy-five per cent of our creditors in number and protected the jobs and entitlements of our employees.”
The ATO – thought to be under pressure from its own multi million dollar anti-phoenixing unit – refused to accept this, and battled it in the courts ever since. This delayed full implementation of the DOCA, which held back progress of the company.
Other Perth printers, as well as printers around the country, were shocked and outraged, pointing out that while they had been paying 100c in the dollar for their tax and paper bills they were now competing against a company that would only be paying 1-2c in the dollar.
Picton was able to carry on trading even though the national and local Perth paper merchants were not supplying it. The source of Picton's paper remains unknown; rumours have it as coming from another printer, or a small east coast merchant.
Picton hit trouble five years ago when it installed its new B1 ten-colour perfector at the same time as the WA economy collapsed. The press was bought on the basis of an $11m turnover, but turnover went from $12.5m in 2011 to $7m in 2017.
Debts owed by Picton include $3.56m to unsecured creditors, of which $663,500 is owed to employees; and $6.8m to secured creditors, of which $5m is owed to the primary creditor Westpac against the directors’ property, $1.46m owed to the secondary creditor NAB against the KBA ten-colour, and $382,000 owed to the third creditor, the CBA, against the company’s two Kodak Nexpresses.
Of the unsecured creditors, the ATO is owed $1.3m, with paper merchant Ball & Doggett owed several hundred thousand dollars, although the merchant was insured. Total amount owed to unsecured creditors owed more than $10,000 apart from the ATO is $884,000, with $94,000 in total owed to those with less than $10,000 due. Related parties are owed $1.27m, with Dennis Hague in for $800,000 of that.
Administrators’ costs have totalled $612,000, of which $477,000 was for the administration period and $135,000 during the DOCA.
The 20 remaining workers are now out of a job. Senior staff including Graham Jamieson, Alan Underwood and Murray Scott have all moved into new roles in the Perth printing community.