Swets in UK owes creditors £7.5m

Swets Information Services Ltd, the British wing of bankrupt Dutch subscriptions company Swets Information Services BV, has unsecured debts of £7.5m, according to administrator Baker Tilly.

In a statement prepared for Companies House, the administrator said that £6.5m of that total was made up of subscription pre-payments made by libraries and other institutions, and £953,756 was "employee-related claims". One hundred and twenty members of staff were made redundant when the UK company entered administration in October.

The administrators said they considered the UK company would have "insufficient" resources to enable unsecured creditors to be paid.

UK creditors include the University of Durham, out of pocket to the tune of £1,859,604; the Dublin Institute of Technology, owed £580,967; Sheffield Hallam University, owed £420,878; the University of Westminster (£226,786); The Robinson Library at Newcastle on Tyne (£223,700) and The James Hutton Institute in Aberdeen (£173,589). Altogether around 500 creditors, many university institutions, are listed in the report as being owed varying sums.

A creditors' meeting will be held later today (Wednesday 17th December), with administrators now proposing to dissolve the company.

Baker Tilly's report said Swets had experienced increasing financial difficulties in recent years, both because of the global economic downturn hitting library budgets, and because the market shift from print to cheaper digital subscriptions had hit its commission levels. "Pressure on gross profit was strongest from the company's top 10 publishers (who represented 55% of gross revenue) as they shifted from print to digital formats. Digital formats also facilitated large publishers to establish direct customer relationships, resulting in partial customer losses," the report said.

Attempts were made to mitigate the profit loss by developing high-value-added products around core subscription management, often in partnership with third parties, and by cutting staff numbers, but it was not enough. Meanwhile a proposed "large acquisition in an adjacent field in an attempt to change the profile of the Swets Group and to be able to offer a wider range of services to publishers" fell through when the Group's parent company declined a new equity injection. "Certain critical issues" in relation to the company's banking were then highlighted, leading to the appointment of a chief restructuring officer early this year and in March, the decision to sell the company. When a buyer failed to materialise insolvency proceedings commenced in the Netherlands.

Overall library debts for Swets Information Services BV stand at €35m, far less than they would have been had the bankruptcy occurred later in the annual academic subscription cycle.