Sydney-based Octopus was wound up on 10 May, owing money to some of Australia’s highest-profile and most respected printers.
ProPrint has spoken to creditors and other senior industry figures, many of whom are bemused at how a print management firm with three staff could have racked up so much debt.
Express Envelopes managing director David Patmore said: “If that model is unsustainable with minimal overheads, it doesn’t say much for the business.” The firm is owed is owed $25,000.
Another creditor, Kenneth Beck from Sydney-based Carbon8, which is owed $4,400, agreed: “It’s unconscionable that they ran up that large a debt in a company that doesn’t need to carry any significant machinery or plant costs and purely makes a margin on work managed.”
ProPrint asked liquidator Adam Shepard of Dean-Willcocks Shepard if he could shed light on the situation but he said it was “not appropriate to speak on current matters”.
Octopus’ former owner-director Michael O’Hara also refused to comment.
A number of industry sources told ProPrint that O’Hara has since joined Geon as a business development manager, a fact backed up by his LinkedIn profile and confirmed by ProPrint‘s investigations.
Geon refused to comment to ProPrint. However, Geon chief executive Graham Morgan commented on the ProPrint forums that any company failure was “indicative of the tough environment that we are all working in” and reinforced the need for “sound debtor control and strong risk management practices”.
Many unpaid creditors concurred that credit management was the key issue at stake and took some responsibility for their exposure.
Carbon8’s Beck said: “We saw it coming so we only have ourselves to blame. We should have insisted on getting a personal guarantee or better credit application documents so that we had some recourse when they failed.”
Mike Hughes, managing director of North Sydney-based Print At Prince, which is owed $27,000, said the firm could have handled Octopus better, but it was difficult to know when to cut off a partner because printers were always looking for more work.
Matt Basclain, general manager of Chatswood-based Cojo, which is owed $9,900, told ProPrint that there had been signs Octopus was in trouble.
“We got indications through a very extended payment history from them. So we stopped work for them a month [before the liquidation], which was enough to reduce what was outstanding,” he said.
Digitalpress is owed $1,400. Founder Theo Pettaras said his company had had “little exposure” as “alarm bells rang early”.
“Once invoices are unpaid after 45-60 days, we frequently call. Once clients do not return calls and extend beyond 90 days, alarm bells start ringing. At that point we decide not to do any more work for them.”
Artvue Printing managing director Shane Wildash called for “a better creditors body within the print industry to alert operators about those that are not making timely payments”. The company is owed $33,000.
He added: “I just hope that the bad debts [Octopus management] has left behind don’t fold some other small operator.”
Offset Alpine Printing was the largest unsecured creditor, owed $334,000. Stephen Anstice, chief executive of its parent company, IPMG, said ways the business could have avoided being so exposed included “insurance, deal[ing] direct with principal [and] personal guarantee backed up with security”.
Anstice added that IPMG would not hire a director who was responsible for burning other companies, “and if we had and then found out we would terminate the person”.
Carbon8 Beck’s agreed. “I’d actively go out of my way to avoid supporting him or anyone supporting him.”
This week’s ProPrint poll asks the question: is the industry’s credit control broken? Click here to vote.
Octopus Solutions Pty Ltd is in no way related to Octopus Productions Pty Ltd.
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