Communisis - Case Update

Mike Pink and Steve Absolom of Interpath Advisory, the joint administrators of Communisis, have filed their proposals outlining what led to the printing giant’s downfall, which parts of the business have been sold since their appointment, and the steps they have taken to ensure customer data is protected.

The Communisis Group operated within the traditional secure print sector, providing physical print and mailing services for a number of the UK’s largest financial and public institutions through its “Customer Experience” division. Its other main constituent part was its “Brand Deployment” division, which provided integrated brand engagement services through a range of in-store and online channels, specialising in point-of-sale displays. In its management accounts for 2021, the Group recorded turnover of approximately £255 million, with Customer Experience generating approximately £122 million, and Customer Experience and all other divisions generating approximately £133 million.

The traditional print part of the Communisis Group was adversely affected by the Covid-19 pandemic, with sales reducing materially from 2020 onwards as a seismic shift toward digitisation accelerated more quickly than forecast. This was exacerbated by financial issues being faced by certain of the Group’s customers as a result of the pandemic.

Throughout 2023, Interpath conducted a marketing process which resulted in two final offers being received on an insolvent basis. Mike Pink and Steve Absolom were appointed joint administrators of Communisis Limited, the UK parent, while James Clark and Steve Absolom were appointed joint administrators of three UK subsidiaries, on 28 December 2023.

Immediately following their appointment, a sale of the company’s business and certain assets to Paragon Group for upfront consideration of £26.9 million was completed, saving 581 jobs across the Communisis Group. Unfortunately, over 600 employees were made redundant. The principal asset sold (which accounted for £22.4 million) was the shares held in PS Holdings Limited, the parent company of the Brand Deployment part of the Group.

Customer data was not sold as part of the transaction, but ownership of the IT infrastructure did pass to Paragon. As a result, a key part of the sale involved the negotiation of a transitional services agreement to, amongst other things, safeguard customer data so that it can be securely preserved and/or deleted.

Communisis had guaranteed debt owed to the Group’s first lien secured lenders, owed approximately $235 million at the time of the appointment. Based on current estimates, there should be sufficient funds to enable a return to the lenders on their fixed charge, and there may be sufficient funds to enable a distribution under the floating charge.

Employees and HMRC may receive a partial of full payment on their ordinary and secondary preferential claims, while unsecured creditors may receive a dividend by way of the Prescribed Part only.

The joint administrators’ progress report can be found HERE. They have been assisted by Clifford Chance and Addleshaw Goddard.