On Product Publishing Group has entered into administration, with the administrator blaming the high costs of complying with worldwide legal and regulatory regimes.
On Product is a marketing services business which owns and developed the intellectual property rights to a concept that combines publishing with consumer packaged goods by enabling mini-magazines to be placed on bottles and packages.
Joanna Wojtalik developed the concept and successfully brought it to market in February 2006 with the launch of iLove, a removable A7 women’s magazine contained within the label of a bottle of Australian spring water.
The company uses Labelzine – a customised product label containing a removable magazine – to attach the magazines. It counts Coca-Cola and Tetra Pak amongst its big name clients.
However, On Product entered into administration earlier this month with Kenneth Stout of Boutique Corporate Advisory appointed as administrator.
Stout told SmartCompany that On Product was seeking a deed of company arrangement which will effectively postpone its obligations when they are due and payable.
“It’s proposing through a funder based in the United Kingdom to offer all its creditors, including employees, a proposal whereby to postpone their claim against the company to a future date or accept a compromised offer which would allow the company to continue to trade,” Stout says.
He says On Product has “substantial” turnover but was brought down by high legal and regulatory costs.
“It was just a question of maintenance of fairly high overhead costs associated with maintaining worldwide patents in various jurisdictions. The legal costs of maintaining those was a fairly large impost,” he says.
The creditors are mainly former directors and shareholders.
“If the deed of company arrangement is not successful the company will pass into liquidation; it would be a sad outcome,” he says.
A second meeting of creditors will be held on September 25.