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Retail

Hobbycraft To Launch CVA to Close Stores And Negotiate With Landlords

in News Retail What is a CVA (Company Voluntary Arrangement)?

Update 19th MayThe CVA has been approved but all that has really happened is that the rents have been changed from quarterly in advance to monthly in arrears.  No wonder it was done ​quite quickly. According to information obtained by Sky News, Modella Capital, a private investment business that specialises in acquiring struggling retailers, including WH Smith, will propose a company voluntary arrangement (CVA) at Hobbycraft as early as Wednesday. It has been reported that it will be FRP Advisory that will propose the CVA.People close to the plan stated that nine of its shops would be closed with the loss of around 100 jobs, and that 18 more would remain open only if negotiations with landlords over rent cuts work out.According to the individuals, 1,800 staff will be protected as an additional 97 stores will not be impacted by the CVA.Hobbycraft ‎is the latest in a series of High Street names to look at trying to reduce the size of their store portfolios amid rising pressures from online and discount rivals, increased employment costs and a deteriorating outlook for consumer confidence.Expensive High Street stores can be cut back provided that the lease allows for early termination.  If not the only way out is to surrender the lease that can be very expensive or use a company voluntary arrangement (CVA).A CVA allows the retailer to determine its lease obligations which can greatly help the company's cash flow. For more information on why a CVA is a perfect mechanism for helping retailers, read our retailer rescue page  Why not read our case study where we rescued a multi-store retailer

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Hobbycraft To Launch CVA to Close Stores And Negotiate With Landlords

The Original Factory Shop (TOFS) Looking at a CVA

in Retail What is a CVA (Company Voluntary Arrangement)?

The Original Factory Shop (TOFS), bought by Modella Capital just four weeks ago, is working with advisers at Interpath on a potential company voluntary arrangement, Sky News has reported.​Modella is looking at a CVA in order to close underperforming businesses and impose rent reductions on others.Potential reorganisation suggestions are also believed to include a significant distribution centre.It is understood that the creditors will meet to vote on the proposal in Mid May.  It is hoping that 88 stores will get rent reductions.There will undoubtedly be some job losses among TOFS's employees, which was estimated to be around 1,800 at the time of last month's takeover, if any so-called "landlord-led" CVA caused store closures. What is a landlord led CVA? A CVA allows the company to terminate its liabilities under a lease provided that the majority of creditors by value (75%) agree. Landlords who do not have large arrears or rent owed to them are permitted in law to vote to the value of only 12 months rent.  In the majority of cases, landlords make up a small proportion of the total debts so they are routinely out voted by suppliers, HMRC etc.This explains why many retailers use this as a way of reducing rental costs as they can make up a high proportion of the companies costs but not their liabilities. So in other words they can get rid of loss making stores and not be on the hook for the 5 year lease.  By applying pressure on landlords, by threatening a CVA, they can get rent reductions on premises that might otherwise have to close.TOFS, which sells beauty brands such as L'Oreal, the sportswear label Adidas and DIY tools made by Black & Decker, has about 180 outlets.​​We will keep this page updated once we know more.

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The Original Factory Shop (TOFS) Looking at a CVA

In The Style in Administration

in A guide for redundant employees in administration or insolvency situations Retail What Does Going Into Administration Mean?

In The Style has gone into administration. FTS Recovery are the administrators.Adam Frisby launched the business in 2013.The fast-fashion store has suffered a decline in its financial performance in recent years, despite aligning itself with several well-known social media influencers.The future of its remaining employees, as well as its brand and other assets, will be uncertain following its collapse into administration.According to one source, the process could result in a pre-pack administration that involves Baaj Capital.Before announcing his most recent departure last year, Mr. Frisby made at least two appearances back at the company.In March 2023, Baaj Capital purchased In The Style, which had previously been valued at over £100 million, for just over £1 million.In 2019, it went public on the junior AIM market in London.

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In The Style in Administration

Quiz Clothing In Administration Rumours

in A guide for redundant employees in administration or insolvency situations News Retail What is a CVA (Company Voluntary Arrangement)?

Update 20th FebruaryIt has been confirmed that Quiz has gone into administraton with the loss of approximately 200 jobs.  23 stores will close.Sky News has reported that Quiz, which is chaired by the former JD Sports chief Peter Cowgill, is lining up Teneo as administrator in a move expected to take place before the end of next week. According to reports, Quiz is purportedly looking to close up to one-third of its stores in order to stabilise its struggling business and reduce costs.The fast fashion chain, which now employs about 1,500 could lose hundreds of jobs as a result of the move, which was lead by the founding Ramzan family.Quiz has hired restructuring specialists at Teneo to investigate its possibilities. Quiz is scheduled to delist from the London Stock Exchange's AIM market and return to private ownership after a shareholder vote earlier this month.Possible actions to help with the closures include a company voluntary arrangement (CVA) or pre-pack administration.A person familiar with the matter told the Telegraph who originally broke the story that "nothing is being ruled out," and that a decision is anticipated in the upcoming weeks.Since taking over as CEO in March 2023, Sheraz has reportedly concentrated on reducing expenses by selling off the chain's underperforming locations.With only £2.3 million in liquidity, including £400,000 in cash reserves and £1.9 million in undrawn banking facilities, Quiz disclosed in the lead-up to Christmas that it was on the verge of going bankrupt.Sheraz's father, Tarak, who started Quiz in 1993 with just one store in Glasgow, gave the business an emergency loan of £1 million last summer. Quiz is now frantically looking for additional finance, probably on harsher conditions, as HSBC is apparently unwilling to continue backing the company.In contrast to its £2.3 million profit the year before, Quiz reported losses of almost £7 million last year. The job of leading the retailer through its turnaround has been placed on chair Peter Cowgill, a former manager of JD Sports.In the upcoming weeks, a formal announcement on the company's future is expected.With Poundland and now Quiz are we going to see a string of retail failures?  At least a CVA gives the company a good chance of continuing to trade

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Quiz Clothing In Administration Rumours

Poundland in CVA rumours

in A guide for redundant employees in administration or insolvency situations News Retail What is a CVA (Company Voluntary Arrangement)?

Sky News has reported that Polish-based Pepco Group, which has controlled Poundland since 2016, has recruited AlixPartners, the retail experts, to handle a sales dip that has prompted worries about company's future.  The company operates over 850 sites and employs 18,000 staffLike for like sales were down 7.3% over the crucial Christmas period.AlixPartners is understood to have been formally engaged last week, with options including a company voluntary arrangement (CVA) or restructuring plan said to have been discussed by a range of advisers on a highly preliminary basis.In its trading statement, Pepco said that Poundland had suffered "a more difficult sales environment and consumer backdrop in the UK, alongside margin pressure and an increasingly higher operating cost environment"."We expect that the toughest comparative quarter for Poundland is now behind us - the same quarter last year represented a period prior to the changes made within our clothing and GM [general merchandise] ranges - and therefore, we expect the negative sales performance for Poundland to moderate as we move through the year."​The company is said to be looking at multiple ways to improve its cash position by selling more goods over £1 to expand its range of products.The mere fact that it has been leaked that a company voluntary arrangement (CVA) has been discussed is pertinent.  The reason is because talk of a CVA can be a very useful tool to put pressure on landlords to consider rent reductions.  Under a CVA the retailer can exit leases, at no cost, leaving landlords out of pocket.  To understand a bit more about this please read our CVA and retailers article.Of course it is also likely that the company will come under extra pressure from the increases in minimum wage, NI increases and the loss of 75% business rates relief.Since the cost of living crisis there has been strong competition from other discounters like B&M and Poundstretcher.  Poundstretcher themselves used a CVA to reduce costs. They exited in 2022 paying just 12p in the £1 to its unsecured creditorsIf such a big retailer were to fail this would send shockwaves through the sector and would be a political headache for the Labour Government.​​

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Poundland in CVA rumours

Wine Rack and Bargain Booze Looking At A CVA

in A guide for redundant employees in administration or insolvency situations Retail What is a CVA (Company Voluntary Arrangement)?

Bargain Booze and Wine Rack off-licences are looking to use a CVA to exit vacant shops according to Sky News ReportsThe shops are owned by Bestway Group, one of Britain's largest privately owned enterprises.  After Conviviality collapsed in 2018, it bought the estate for £7m.One real estate insider said landlords' refusal to compromise prevented the company from exiting the leases.The sources said PricewaterhouseCoopers will lead the CVA before Christmas.Bestway's 200 locations are mostly Bargain Booze and Wine Rack.The threat of a CVA may well put pressure on the landlords to reduce the rent. This is a well known tactic of retailers who need to exit loss making sites. For more information on Retailer CVAs see this page.Bestway operates food wholesale, Well pharmacies, cement, real estate, and United Bank, Pakistan's largest lender.

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Wine Rack and Bargain Booze Looking At A CVA
TGI Logo

TGI Fridays Secures A Rescue Deal Resulting In 35 Immediate Site Closures

in A guide for redundant employees in administration or insolvency situations Retail What Does Going Into Administration Mean?

Update 07th OctoberBreal Capital and Calveton UK have secured a rescue deal for TGI Fridays, meaning the chain will continue to exist on UK high streets.However, the deal includes just 51 of its 86 sites, forcing 35 to shut with immediate effect.1,012 redundancies have been made - please refer to our guide here on your rights in redundancy.The new private equity owners, Breal and Calveton, jointly own the upmarket restaurant chain D&D London. Between them they have also had investments in Byron Burger and wine bar chain Vinoteca - so they are no stranger to the restaurant world! A full list of the TGI Friday sites closingBarnsley Birmingham Bracknell Brighton Marina Bristol Cabot Circus Cardiff Newport Road Chelmsford Cheltenham Croydon Derby Dundee Durham Edinburgh Fort Kinnaird Enfield Gateshead Gloucester Quays Halifax Jersey Leeds Leeds Trinity Leicester Lincoln Manchester Royal Exchange Newcastle Eldon Square Newport Northampton Prestwich Romford Sale Solihull Southampton West Quay South Speke Sutton Coldfield Swansea Watford NorthUpdate 19th SeptemberHostmore, the owners of TGI Fridays has gone into administration and the 86 sites are now officially up for sale."The sale process remains ongoing, with no decisions having been made to close any existing stores, and TGI Fridays continues to operate normally across the country," a Hostmore spokesperson told the BBC.According to reports in the Telegraph administrators at Teneo, the restructuring firm, are on standby if TGI Fridays cannot sell its restaurants.  The firm ran into trouble following its attempted foray into the US.  The chain has 86 restaurants and employs 3000 people.The owners of the chain, Hostmore, has £35m of debts.The business was spun out of private equity trust Electra in November 2021 in a move that Hostmore chief executive Robert Cook hailed as a “significant milestone”.Its shares started trading at 147p but by March of last year it had lost 90% of its value.  By Monday 16th September 2024 the whole company has been valued at £1m. Could it be that TGIs could go into a CVA? The CVA would only really work if the main problem was high rents or just certain outlets needed to be closed down.  The money that it owes its lender is no doubt secured so they have the power to call in administrators at any time.Without knowing more about its exact financial position it is hard to say.If the company does go into administration it is likely that a number of the restaurants, which are making money, will be snapped up by other restaurant groups and may continue to trade under the TGI brand.  If not then the owners will take advantage of their prime locations.

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TGI Fridays Secures A Rescue Deal Resulting In 35 Immediate Site Closures

Dobbies Looking To Close Stores In A Restructuring

in Retail

Dobbies, the garden centre group, is looking to close 17 of its 77 stores before the end of the year, in order to address “historically uneconomical rent costs”.The garden centre group is embarking on a restructuring plan expected to return Dobbies to “sustainable profitability” that impacts 465 staff (of which 82 work full-time).11 unprofitable garden centres and all six of its ‘little Dobbies’ high street sites will shut, whilst the group looks to secure rent reductions at another nine sites.Reports back in August indicated that FTI Consulting were advising them on a possible CVAThis would enable them to put pressure on landlords to reduce rents as a CVA can allow the company to exit premises if the CVA is approved.  However, in subsequent statements it is clear that it has moved to a restructuring plan.  Such a plan will include secured creditors as well whereas a CVA is only binding on unsecured creditors.  A restructuring plan also has to be approved by a court.Dobbies was established in 1865 and grew to employ 3,600 staff across the UK. It was acquired by Ares Management last year and reported a £105.2m pre-tax loss in the year to March 2023.The company said: “The restructuring plan, and other strategic initiatives, are expected to return Dobbies to sustainable profitability through site rationalisations, rent reductions and other tangible cost savings, securing its long-term future and allowing access to future investment.“Thereafter, Dobbies will operate 60 stores and continue to play a key role in the market, working constructively with stakeholders and suppliers, and having an active and committed role in the communities in which it’s based.”The garden centres closing this year: Altrincham Antrim Gloucester Gosforth Harlestone Heath Huntingdon Inverness King’s Lynn Pennine Reading Stratford-upon-AvonThe Little Dobbies high street stores closing: Cheltenham Chiswick Clifton Richmond upon Thames Stockbridge Westbourne Grove, London

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Dobbies Looking To Close Stores In A Restructuring

Remainder of The Body Shop Stores Saved From Closure Amid Administration Rescue Deal

in A guide for redundant employees in administration or insolvency situations Retail What Does Going Into Administration Mean?

Update as per September 2024100+ Body Shop stores have been rescued from closure following an administration rescue deal by a consortium led by Mike Jatania.Mr Jatania is known a 'Cosmetics King'. The deal came from Aurea, his investment firm.Reports share that this new deal will ''steer the Body Shop's revival and reclaim its global leadership in the ethical beauty sector it pioneered''.Sky News report more.End of February 2024According to reports the Body Shop may be using a CVA to exit from administration in order to continue trading.  The administrators have drawn up plans to discuss rent cuts with landlords.  Read our page on administration followed by CVA 20th February 2024The Body Shop has announced that it will close approximately half of its stores, starting with 7 that will close immediately today; Surrey Quays (London), Oxford Street (London), Canary Wharf (London), Cheapside (London), Nuneaton (Warwickshire), Ashford Town Centre (Kent), Bristol Queens Road (Bristol).Along with the store closures, is the cutting of 40% of roles at its London headquarters - leaving around 400 full-time employees.The Body Shop ambassador programme is also going to close. This is the scheme were individuals sell products for a commission.Administrators say the brand's current portfolio is ''no longer viable'' after ''years of unprofitability''. The restructuring will include a renewed focus on the companies' products, online sales channels and wholesale. 13 February 2024Following the reports this weekend, administrators from FRP Advisory have officially been appointed to ''accelerate the restructuring'' of the UK arm of The Body Shop.Administrators will explore all options going forward for the business.Joint administrators, Tony Wright, Geoff Rowley, and Alastair Massey, will continue to trade the business in administration. 12 February 2024It has been reported this weekend that cosmetics retail chain, The Body Shop, is preparing to appoint administrators from FRP Advisory to its UK arm. This comes just six weeks after the chains new owner, Aurelius, took control.It is understood that the retailer experienced weak trading over the festive period and early January, coupled with having insufficient working capital.In the UK, Body Shop has 200 stores to the along with its headquarters in London -It seems unlikely that the British cosmetics, skin-care and perfume company, set up by the late Anita Roddick, will disappear from our high streets completely.  What is likely, is that there will be a focus on reducing its costs and building up a stronger online presence.  The brand still has appeal for its ethical stance and is popular with younger shoppers. Though the process of administration is being explored for the UK operations, the brands global franchise partners are not affected.In fact, very recently, parts of The Body Shop's businesses across Europe and Asia  have been sold to an unnamed family office - according to Retail Week.Will we see The Body Shop appoint administrators? Will there be a change in owners for the fourth time?It is interesting to see that the company has not opted for a Company Voluntary Arrangement.  This may be due to the fact that its problems do not stem from a number of poorly performing stores (which can be exited in a CVA) but to more widespread difficulties.  It is also likely that the owners have security over the assets of the brand.  If they have security then they can appoint administrators and are first in line for any payouts.This news piece will be kept up to date in accordance to current events. You can find out more on this story from BBC News. 

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Remainder of The Body Shop Stores Saved From Closure Amid Administration Rescue Deal

CTD Tiles Has Gone Into Administration – Some Stores Saved By Topps

in A guide for redundant employees in administration or insolvency situations Retail What Does Going Into Administration Mean?

CTD Tiles goes into administration and closes 56 of its outlets.The company's administrators stated that 268 employees were laid off as a result of the failure.Despite the huge number of retail closures, rival Topps Group purchased 30 CTD Tiles locations and two distribution sites in a rescue plan.Topps Tiles has purchased CTD Tiles' brand and intellectual property for £9 million from administration.The tile expert has purchased the supplier's brands, which include CTD Tiles, CTD Trade, and CTD Architectural Tiles, as well as 30 retail outlets, chosen inventory, and all related intellectual property.Topps stated that the retailer is "complementary" to its other businesses and that the acquired stores and assets provide it with "the opportunity to make a meaningful entry into the housebuilder segment and expand its existing share of the architect and designer segment".Topps bought 30 branches that generated £20 million in sales for the fiscal year ending June 2024 and will continue to trade under the CTD brand name. Why didn't Topps Tiles buy the company in a Pre Pack Administration? A pre pack administration sale is possible in these circumstances but the downside is that Topps would have had to take on all the employees via a TUPE process.  By waiting until the administration was started they were able to pick up the assets they wanted.  CTD might have been able to use a CVA to reduce stores but without knowing the make up of the creditors it is difficult to say.  If the business was simply not viable or had significant secured lenders then an administration would have been the correct procedure.If you have purchased goods from CTD then see this page on your rights Below is a full list of the stores which have been immediately shut and those which have been saved: 56 store closures: Aintree, Liverpool Ashford, Kent Aylesbury, Buckinghamshire Basildon, Essex Blackpool, Lancashire Bolton, Lancashire Brierley Hill, West Midlands Cambridge Central, Cambridgeshire Canterbury, Kent Carlisle, Cumbria Chelmsford, Essex Chester, Cheshire Colchester, Essex Coventry, Warwickshire Cricklewood, Greater London Croydon, Greater London Denton, Greater Manchester Derby Ascot Drive, Derbyshire Dundee, Scotland Eastbourne, East Sussex Exeter, Devon Falkirk, Scotland Gateshead, Tyne and Wear Glasgow Helen Street, Scotland Hanwell, Greater London Harlow, Essex Huddersfield, West Yorkshire Ipswich, Suffolk Kilmarnock, Scotland King’s Lynn, Norfolk Leeds, West Yorkshire Lincoln, Lincolnshire Livingston, Scotland Maidstone, Kent Newcastle North Shields, Tyne and Wear Newcastle West Kingston Park, Tyne and Wear Northampton, Northamptonshire Peterlee, Scotland Plymouth, Devon Portsmouth, Hampshire Preston, Lancashire Rochdale, Lancashire Rotherham, South Yorkshire Slough, Berkshire Southampton, Hampshire St Albans, Hertfordshire Stirling, Scotland Stratford Upon Avon, Warwickshire Sunderland, Tyne and Wear Sutton Coldfield, West Midlands Swindon, Wiltshire Tonbridge, Kent Uxbridge, Greater London Wembley Stadium, Greater London Weston-Super-Mare, Somerset Whetstone, Leicestershire  30 stores rescued by Topps: Aberdeen, Scotland Basingstoke, Hampshire Birkenhead, Merseyside Cambridge Bar Hill, Cambridgeshire Chichester, West Sussex Coatbridge, Scotland Coulsdon, Greater London Crawley, West Sussex Darlington, County Durham Dorking, Surrey Edinburgh Seafield, Scotland Edinburgh Stenhouse, Scotland Fakenham, Norfolk Farnham, Surrey Glasgow London Road, Scotland Hampton, Greater London Hull, East Yorkshire Inverness, Scotland Newbury, Berkshire Newcastle Under Lyme, Staffordshire Norwich, Norfolk Nottingham, Nottinghamshire Perth, Scotland Peterborough, Cambridgeshire Poole, Dorset Stockton, County Durham Warrington, Cheshire Watford, Hertfordshire Wimbledon, Greater London Woking, Surrey

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CTD Tiles Has Gone Into Administration – Some Stores Saved By Topps

Tapi Carpets Rescues some stores from Carpetright

in Pre Pack Administration Process and Procedures Retail What is a CVA (Company Voluntary Arrangement)?

Update. 22nd July 2024Carpetright has been rescued in part by its rival Tapi Carpets.  The company will keep 54 stores but 200 are still at risk. The deal will also result in 1,018 job losses across Carpetright’s Purfleet head office and its remaining 218 UK wide stores.PwC administrators who are handling this administration, said that some HQ employees will be retained for a short period to help in the winding down procedure.Retail Gazette share more. Flooring specialist, Carpetright, has confirmed it has filed a notice of intention to appoint administrators.This notice allows breathing space of ten days, whilst a rescue line is sought. If no rescue is found in the period, insolvency is likely.This comes as the flooring retailer faces trading difficulty with increased competition and a fall in demand.Expected outcomes, should a rescue deal be made, are a pre-pack deal or a company voluntary arrangement. These options would potentially leave customers, suppliers, subcontractors and landlords out of pocket,  result in store closures and leave 1,852 jobs at risk.The firm are however working towards a reprieve - hoping to secure additional funding to see them out of the red.This is not the first time Carpetright has hit the news for trading difficulty. Recent events:Teneo were appointed in April to explore cost-saving measures for the loss-making chain In April there was a financial strain placed on Carpetright when a cyberattack left it unable to trade online and in-store for almost a week In June it was reported that the retailer were looking to axe more than 25% of its head office staff as it looked to streamline operationsCarpetright has 272 UK stores and employs over 3,000 staff.

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Tapi Carpets Rescues some stores from Carpetright

Cineworld Looking At A CVA

in A guide for redundant employees in administration or insolvency situations Retail What is a CVA (Company Voluntary Arrangement)?

According to information obtained by Sky News, the movie chain and its advisors at AlixPartners have started formally investigating a company voluntary arrangement (CVA).  This is following earlier reports that the company was seeking a sale of the business.The Cineworld chain is a global business that went into Chapter 11 bankruptcy protection in the US back in 2022.  It has now emerged from that and much of its debts have been swapped for equity.  So it seems that many investors are still keen to be part of it.In the abscence of any sort of sale a CVA is the companies best chance of reducing its overheads as it enables it to exit non profit making cinemas.  It can also help restructure its unsecured debts provided that the creditors agree to its proposal.  75% by value of those that vote will need to support any proposal.The company has more than 100 sites in the UK, including the Picturehouse chain, and employs thousands of peopleIn a statement issued to Sky News earlier in the month, it said: "Like many businesses, we are continually reviewing our UK operations."It is also worth pointing out that this years film releases have underperformed.  Furiosa, Fall Guy, Civil War, Planet of the Apes have been well below expectations.  This is probably a combination of high ticket prices, streaming competition and lower quality compared to previous years..

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Cineworld Looking At A CVA