Johnston Press administrator says creditors will face a ‘significant’ cash shortfall

The administrator of struggling publishing company Johnston Press has said there will be “a significant shortfall” of money for creditors after being sold out of pre-pack administration last week.

Alix Partners, the company’s administrators, warned in their first report that although funds would be available to secured bondholders and to unsecured creditors, there would still be a significant shortfall.

Johnston Press owns the i newspaper, The Scotsman and the Yorkshire Post.

Last week Johnston Press’s lenders set up a company, JPI Media, to acquire the publisher, saying a 60 per cent cancellation of debt and £35m cash boost would allow its media titles to continue running.

However, the deal does not secure the company’s defined benefit pension scheme, which was running on a £40.7m deficit.

A spokesman for Alix Partners said: ‘‘We are confident that, in the circumstances, the sale achieved the best available outcome for creditors. We are also satisfied that the marketing process for the sale of the business and assets was appropriate and well publicised.

“The sale consideration, which resulted from the best offer received, was consistent with independent valuations carried out by Mazars and far in excess of other offers received. Proceeding with a swift ‘pre-pack’ had the additional advantages of mitigating disruption to the business and importantly preserving jobs across the organisation.”

Pre-pack administrations have been controversial in the past because they allow a business to go insolvent overnight with the company sold the next day, minus its liabilities.

Following the pre-pack sale JPI Media chief executive David King wrote to employees, warning that 250 current staff members could see their pensions affected.