// Paperchase owners Permira Debt Managers have turned down a review of its pre-pack administration
// Private equity firm Permira bought the key assets of the business via a pre-pack administration last month
// Paperchase collapsed into administration at the end of January after slow sales
Paperchase owners have reportedly chosen not to refer their acquisition to a scheme that reviews the sale of failed companies’ assets to connected parties.
The retailer’s secured creditor Permira Debt Managers – the credit arm of the eponymous private equity firm – purchased the key assets of the business via a pre-pack administration last month from private equity firm Primary Capital.
Joint administrators from PwC have advised Permira that it “could consider” referring the purchase to the “pre-pack pool” – an independent body set up to provide oversight of pre-packs where assets are sold to connected parties, The Times reported.
Permira said it “chose not to” approach the pre-pack pool because it does not qualify as a connected party under industry rules.
The company paid £40 million for certain Paperchase assets through an entity called Aspen Phoenix Newco, by way of a “credit bid”.
This reduced the £55.2 million it was owed at the point of the company’s failure.
While the insolvency process is expected to see secured and preferential creditors recover all, or the vast majority, of their debts, unsecured creditors such as landlords and suppliers are unlikely to get back more than 4p for every £1 they are owed.
Debts to unsecured creditors stand at £15 million.
Paperchase collapsed into administration at the end of January after its bankers, Lloyds, declined to provide an emergency state-backed loan.
The pre-pack administration deal saves 761 jobs out of 1278. A further 200 have been saved during administration.