Ovato assets sold in liquidation sale, outcome still unknown for unsecured creditors

Ovato printing at Enterprise Park in Auckland. Photo / Google Maps

Liquidators have sold the plant and machinery of collapsed printing and distribution company Ovato, enabling secured creditors to be paid, but there remains a shortfall for unsecured creditors and staff.

Ovato, one of New Zealand's largest commercial printers, went into voluntary administration along with its Australian parent company in July, after battling with a drop in demand and increasing cost pressures.

Last week administrators Rees Logan and Andrew McKay of BDO Auckland were also appointed liquidators of the company after no offers were received for the sale of the business as a going concern.

Ovato NZ is owned by Ovato Ltd, an Australian registered and listed company.

In their first report issued yesterday, Logan and McKay said they had sold all plant and machinery for $1.69 million. The final price was adjusted down from $2.15m due to a damaged printing press, which was now subject to an insurance claim.

The Herald understands that rival printing company Blue Star NZ was most likely to have purchased the plant and machinery. A representative of Blue Star declined to comment.

Logan and McKay noted in their report that overseas secured creditors Scottish Pacific Business Finance Pty Ltd ("Scotpac") and Opus Group (Australia) had been repaid from the sale of Australian and New Zealand assets.

Opus was owed approximately A$10m across the Australian and New Zealand businesses. It was repaid about $9m from the Australian administration and approximately A$843,000 (NZ$983,000) from the New Zealand sale proceeds.

Meanwhile, more than 60 creditors were named in the liquidator's report, including Vodafone NZ, Sky Network Television, NZ Post, Vector and Inland Revenue.

The liquidators' report noted an estimated $2.3m-$2.6m was owed to unsecured creditors, and $2.5m-$2.7m to preferential creditors, but it was too early to reliably estimate what funds, "if any", will be available for both these classes of creditors.

Staff wages have been paid, they said, but an estimated $1.1m to $1.2m is still outstanding for holiday pay and redundancy.

Ovato printed items such as commercial catalogues and magazines.

In April, the company announced the closure of its heatset printing operation at its Auckland plant and instead keep a smaller sheetfed production line at its Wiri plant. But that wasn't enough to stave off liquidation.

Ovato blamed the rising cost of importing paper and shortages due to "unprecedented paper supply chain issues".

Ovato's then-managing director Paul Gardiner said at the time: "We simply cannot run a sustainable heatset business without paper."

The move resulted in approximately 150 staff being made redundant.

According to the liquidator's report, the cost of closing the heatset business was "substantial", including redundancy liabilities.

The report said that without funding support from parent company Ovato Limited, it was no longer viable for the companies to continue trading.

The abrupt closure of Ovato's heatset operation in Auckland in April left magazines scrambling to find new printers.