Paperchase sees key credit insurer reduce cover
Paperchase is facing increasing pressure as one of its main credit insurers has reduced its cover after the company posted a slump in profits.
Paperchase saw its profits before tax drop 88% to just £613,000 in the year to 28 January, according to its latest accounts filed with Companies House.
As a result Euler Hermes has now refused to offer cover for any new contracts with suppliers, although Paperchase’s existing suppliers will be unaffected. This means that suppliers will look for payment upfront, as it will have no other assurance of payment and could lead to further financial woes due to both cash and stock shortages.
Paperchase told the Sunday Telegraph: “We are disappointed Euler Hermes has reduced credit insurance. We don’t think it is fair and we think they should reverse it. There is no cash issue. We have been around for 50 years and plan to be for another 50.”
The group is currently owned by Primary Capital, who also own Yo Sushi and Coffee Nation after it was acquired in a management buyout in 2010 from the bookseller Borders UK.
Since the acquisition the company has expanded rapidly and has opened around 75 new stores and now employs around 2,000 people.
The news follows a similar instance at embattled department store Debenhams after Euler Hermes, Coface and Atradius all reduced cover for new supplier contracts.
