Paperlinx seeks creditor protection for its businesses in Belgium and Netherlands.
Paperlinx B.V., the Paperlinx operating company in the Netherlands and Belgium, has filed for a Suspension of Payments under the Dutch Bankruptcy Code (Faillissementswet) on 14 April. The company cites "substantial ongoing operating losses due to declining revenues and falling profit margins from lowered demand for paper in the Benelux region together with challenges in restructuring, the tightening of supplier payment terms following withdrawals of trade credit insurance and the flow on impact of the PaperlinX UK administration" as the main reason for taking this action.
Paperlinx has reportedly invested substantial funds over the past five years into the restructuring of the Benelux and other European operations, but did not succeed in turning around the company's performance. The sale of Papelinx Benelux operations also failed to materialise.
At the start of April, Paperlinx has already filed for the opening of insolvency proceedings for its paper merchanting business in the UK. According to the company, the appointment of administrators to the Benelux and UK business may have an impact on the remaining European business. Nevertheless, the company will continue with the sales efforts for its subsidiaries in Austria, Czech Republic, Germany, Ireland, Poland and Spain.
Suspension of Payments is the Dutch creditor protection proceeding. It is intended to provide temporary breathing room to an ailing debtor by protecting him from action by the creditor. Suspension of Payment terminates in the case that all creditors are paid, a creditor settlement agreement is reached or if the company is declared bankrupt.