Stationery chain Paperchase is crying foul after the likes of Euler Hermes reportedly cut credit insurance cover for suppliers.
The news comes barely a week following the more than 10% trading hit on fellow high street retailer Debenhams, whose suppliers no longer enjoy the same level of cover from credit insurers. Chair Sir Ian Cheshire has since clarified that the department store chain is not insolvent, despite its multiple profit warnings and a downgrade from rating agency Moody’s.
“Against this background, we are no longer able to retain existing levels of cover,” Euler Hermes was quoted by The Sunday Times earlier this month as saying in a letter to Debenhams suppliers.
As for Paperchase, new contracts with suppliers are not being afforded protection anymore by the same credit insurer, according to sources cited by The Sunday Telegraph. Providers Atradius and Coface are also said to have made adjustments, amid supposed financial woes being faced by the greeting cards business.
“We are disappointed Euler Hermes has reduced credit insurance,” the publication quoted Paperchase as saying. “We don’t think it is fair and we think they should reverse it.
“There is no cash issue. We have been around for 50 years and plan to be for another 50.”
The case of Paperchase is the latest in a series that has seen retailers slammed with reduced credit insurance cover.