Retail

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
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Laybuy Goes Into Administration

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

Laybuy, the pay now pay later firm, has collapsed into administration just days after suspending its service.  The company allowed customers to buy products online and spread the costs over 2-3 months.The company has 500,000 users operates across New Zealand, Australia, and the UK with 300,000 in the UK.The company has gone bust in New Zealand after failing to find a buyer.Sam Ballinger, joint administrator at FTI Consulting, said: "The joint administrators are currently assessing the options available to the companies and supporting the employees, merchants and other affected stakeholders through this difficult period."Laybuy is not currently accepting new transactions, however, customers should continue to make payments as normal."FTI said that further updates including those affecting customers will be shared in the coming days at www.fticonsulting.com/uk/creditors-portal/laybuy-uk.It is indeed a good idea that any customers who have bought goods using Laybuy must continue to make payments.  The administrators will pursue any customers who do not pay and non payments will affect your credit score.The company has 29 employees in the UK.It is possible that the company may be sold out of administration.  Klarna are the main operator in this market space and could be interested if Laybuy had any particular areas where they dominated.  However with 300,000 users in the UK it might be worth waiting until all those payments have been made and they simply have the technology left over.

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Laybuy Goes Into Administration
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Superdry Creditors Vote in Favour of Restructuring Plan

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

Update: 11 June 202499% of Superdry creditors have voted in favour of the proposed restructuring plans to rescue the fashion retailer.The proposed plan includes a delisting from the stock market, achieving rent reductions at 39 of its 94 UK stores and an equity raise underwritten by founder, Julian Dunkerton.This is a restructuring plan under part 26 of the Companies Act Update: 15 April 2024It hits the news today that landlords of Superdry are considering a restructuring deal that would result in steep rent cuts at a large proportion of its 94 British shops. The scale of the rent cuts would be dependent on the financial performance of each site.According to City sources, the fashion retailer is not planning on any permanent closures, but landlords would have the option to terminate any leases if they were not satisfied with the terms of the deal.Superdry has been facing red for some time. Most recently there were talks with founder, Julian Dunkerton regarding a takeover, but such talks were then aborted.Sky News share more. Update : 29 January 2024In line with other retailers Superdry has been finding trading difficult due to the cost of living crisis.  It has also been cutting back its store count. The clothing brand has 104 stores in the UK and started closing some back in July 2023.  The company also announced that it was looking at costs savings of some £40m.  This is an increase from the £35m they announced recently.  There are now rumours circulating that the company is looking at a Company Voluntary Arrangement (CVA) as a way of cutting costs.The CVA is a powerful rescue tool that is particularly favoured by retailers due to is ability to allow companies to vacate properties and determine their lease obligations.  The cost of high rent shops on long leases can be a heavy burden on retailers.The following case law has been used for some years now to terminate leases with no cash cost to the company.Re: Doorbar v Alltime Securities Ltd (1995) BCC 1149 stated that landlords can be bound by voluntary arrangements for future obligations under a lease.Re: Cancol Ltd (1995) BCC 1133 that the word ‘creditor’ in r1.17(1) IR 86 was wide enough to include a landlord with a right to future rent i.e. the ability to include future rent extends to CVAs as well as Individual Voluntary Arrangements.Furthermore, where the unliquidated or unascertained claim in a CVA involves future rents accruing to a landlord, the case of Re Park Air Services [1996] BCC 556) gives the CVA meeting   chairman some considerable guidance as to quantifying the claim at the meeting.Another reason that Superdry is finding itself in difficulty is that it rapidly expanded to try and become a global super brand.  No doubt much of this expanision was fueled by cheap debt and as many companies are now finding out when interest rates rise and customers pull back the going gets very tough.  As such the shares have lost almost 90% of their value in the last 12 monthsSky News has reported that PWC are the advisors that are looking at restructuring options.It is quite standard practice to put out stories about a possible CVA as this does prepare the ground for negotiations with landlords.  They will be asking the landlords for substantial rent reductions in order for them to survive.  If landlords refuse then they can usually get other suppliers and trade creditors to support a CVA proposal and out vote them.Landlords have tried to challenge CVAs in the courts on the grounds that they unfairly prejudice their position but have so far failed to succeed. 

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Superdry Creditors Vote in Favour of Restructuring Plan

Mercian Cycles To Go Into Liquidation

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

Derby based Cycle builder Mercian Cycles has gone into liquidation.  The firm specialised in making high quality steel frames with hand made decorative joinery ("lugs" in bike parlance).The company confirmed thr news to the publication road.cc saying: "Mercian Cycles Ltd has ceased to trade, and we have instructed an Insolvency Practitioner to assist us with taking the appropriate steps to place the Company into Creditors' Voluntary Liquidation."Opus Business Advisory Group have been appointed liquidators and said "we will be working closely with the company to help manage a controlled wind down of the business and a smooth transition for stakeholders".The bike company was founded in 1946 and was seen as quite eccentric with its lugs and flamboyant colours.  The firm had quite a cult following in the UK and the USA.However the cycling industry has had a hard time of late due to over capacity following the pandemic when everyone suddenly started to spend money on Bicycles.  Unfortunately, this new found enthusiasm did not last.

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Mercian Cycles To Go Into Liquidation
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Cazoo In Administration Move

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

Update 28th June 2024 The Cazoo brand has been bought by Motors, the online market place.  However they have not bought the whole business.   Update 21st May 2024 Cazoo is expected to go into administration today with Teneo being the appointed advisors.  The notice of intention to appoint moratorium expires tomorrow and there appears to not have been a rescue or sale.   Cazoo, the online second car dealer, has filed a notice of intention to appoint administrators.  The company was at one point worth £6bn and employed 5000 people.  Cazoo was floated on the US stock market and made its founder, Alex Chesterman, (on paper at least) one of the richest men in the UK. The company boomed as it offered a platform for people to buy cars online and have them delivered to their home.  The pandemic helped their growth and the company spent millions on advertising and sponsorship deals. The company admitted last week that it was burning through £10m of cash a month and that it needed an urgent capital injection to survive. Other factors contributing to its problems has been the rapid fall in second hand car values and the slower uptake of electric cars. The company is not in administration right now but has filed an intention to appoint administrators.  This means that the company has 10 days protection from its creditors, who may be threatening winding up petitions, whilst it tries to raise addition funds or sell the business. Once that time period is up they may be able to extend for another 10 days, subject to approval by the court, but there has to be a very strong reason to do so. Check the links on the right hand side for other questions regarding companies going into administration

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Cazoo In Administration Move

Everest To Go Into Administration

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

ReSolve administrators were appointed on Friday to oversee the operations of Everest 2020 Ltd. They will look for a buyer to save all or a portion of the company.More than ten years ago, after it needed a reorganisation, the specialised double glazing company was purchased by British venture capitalist Jon Moulton's investment firm Better Capital.Afterwards, the Covid-19 outbreak struck Everest especially hard; as a result, Better Capital put the company in a pre-pack administration in June 2020, sparing hundreds of jobs.Everest operated a manufacturing facility in Treherbert, Wales, in addition to its headquarters in Cuffley, Hertfordshire.

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Everest To Go Into Administration

Notts County Administration Threat

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

Article Originally published in February 2019 The worlds oldest football league club, Notts County, risk going into administration, according to an exclusive Sky Sports News report. The club are five points from safety of the league, with a financial crisis giving their future many red cards. Chairman, Alan Hardy brought the club in January 2017, and put it up for sale just last month. To purchase the club, it has been revealed that Hardy used a loan from his interior design company, Paragon. The recent accounts posted on Companies House in June 2017, refer to a ‘related party debt’, of £7m, for Paragon Interiors Group – the value of the funds used to buy the club. Paragons business situation stresses administration, with the company already stopping work on numerous projects, advising customers they will hope to catch up in March. If the business call in administrators, the debt from Notts County is likely to be demanded, leaving huge doubt for the football clubs finances and future. Supporters to the club have watched them loose their league two play-off semi final to Coventry in May…thinking that was bad, they now watch them face relegation for the first time of the 157-years of existence. Will the final whistle be blown? Is this the end?

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Notts County Administration Threat
ted baker

All UK Stores to Close and 1000 Jobs Lost for Ted Baker

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

29th July 2024Ted Baker has now announced that it is to close all its UK stores.8th April 2024Administrators announce that Ted Baker is to close 15 UK stores (of which ''have no prospect of being returned to profitability, even with material rent reductions") and cut 245 jobs.Of this, 11 stores will close by 19 April, resulting in the loss of 120 jobs.Then 25 roles from head office will go along with a further 4 stores, impacting the remaining 100 jobs.For the full list of closing stores:Birmingham Bullring Bristol Bromley Cambridge Exeter Leeds Liverpool One London Bridge Milton Keynes Nottingham Oxford Bicester London Brompton Road London Floral Street Manchester Trafford 22nd March 2024Teneo has been appointed as administrator of No Ordinary Designer Label (NODL) Limited - the company of which runs 46 Ted Baker stores in the UK along with a website and concessions.NODL has approx. 975 employees.Authentic Brands, which licenses the Ted Baker brand to the NODL, is in advanced discussions with potential buyers for the company.Reported reasons for the appointment of administrators are the struggles the firm faced following damage done during a partnership and a high level of arrears built up during a partnership with AARC Group. At the end of January 2024 AARC and NODL cut ties. 19th March 2024 It has been reported that Ted Baker, the clothing retailer, has filed a Notice of Intention to Appoint Administrators. This move is designed to give it a chance of recovery by protecting it from creditors legal actions for a 10 day period.  An injection of capital or a sale is hoped to be achieved during this period.A filed winding up petition (subsequently withdrawn) forced Ted Baker's hand.This latest move comes after the company delisted from the Stock Exchange and was sold to US-based Authentic Brands Group (ABG) for a knockdown price of £210m.  This follows a similar pattern to The Body Shop that was also bought out by private equity and then months later went into administration. Why don't these companies consider using a CVA to lower their debt? The likely reason is that these companies have been loaded with lots of secure debt which cannot be compromised by a CVA.  Property costs, HMRC, and suppliers are unsecured and can be bound by the terms of a CVA.  So, in essence, it wasn't expensive shop premises that have caused problems but indebtness.Ted Baker has suffered, like many other retailers, by the lockdowns, cost of living crisis and has borrowed money to try and survive.John McNamara, chief strategy officer for Authentic Brands Group, said: “We wish that there could have been a better outcome for the Ted Baker employees and stakeholders. We remain focused on securing a new partner to uphold and grow the Ted Baker brand in the UK and Europe where it began.”The company employs more than 900 staff and currently operates 46 stores across the country, as well as online and through department store concessions.There has not been an announcement on any redundancies yet.

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All UK Stores to Close and 1000 Jobs Lost for Ted Baker

Matchesfashion to dwindle into administration

in Retail What Does Going Into Administration Mean?

Matchesfashion, the luxury online clothes retailer is to be put into administration by Mike Ashley's Frasers Group.Sky News reports that a number of brands terminated their relationship with the site and the company faced heavy losses, thus the filing of a notice of intention to appoint administrators.Other sources have reported that some of the brands have not been paid for months and that some suppliers were asked for discounts.Along with this, there has been a sharp slowdown noticed across the global luxury goods sector, as the UKs current economic state has left many consumers with less disposable income to put towards such goods.Frasers Group took on the clothing platform not even 3 months ago. It is not clear if control would remain with Frasers in the event of a pre-pack insolvency.Nick Beighton has led the company since 2022. With his leadership the platform saw a steep increase in performance, said to be due to his renewed focus on operational efficiency and effective marketing. It is also unclear if Mr Beighton would continue in his role post-administration.Matchesfashion features more than 500 established and 'new generation' designers, delivering to over 170 countries.Matchesfashion is the second high-profile retailer to be put into administration shortly after being taken over in recent weeks. Earlier this year Aurelius placed the UK chain of The Body Shop into administration.  Why does this happen?  Could it be hubris or do these buyers see more value in the brand name rather than the actual business in the long term.  The brand name is usually retained and sold back to the original owners if the business as a whole is not sold to a third party.Will the clothing platform be brought back to life?

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Matchesfashion to dwindle into administration
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VBites Goes Into Administration

in Retail

22 January 2024 New documents reveal that Heather Mills, business founder of the collapsed VBites, has bought the assets from administrators in a rescue deal worth £1m.Only the plant, machinery, stock, IP and social media was included in the deal. The jobs of the 84 staff (64 retained through the administration and 20 let go at the appointing of administrators) was not included.This being said, Mills is believed to have re-employed about 40 staff which may increase as time goes on. The Peterlee and Corby factories remain operational.  12 December 2023 VBites, the vegan food business founded in 1993 by Heather Mills, ex-wife of Sir Paul McCartney, has gone into administration. The company cited higher energy and raw material costs.As vegan product demand increased, the business acquired Redwood Wholefood in 2009, but growing costs and supply concerns hurt it.Ms. Mills was upset by the failure and thanked her team for their "blood, sweat and tears" over 30 years in the industry."This is extremely distressing for me on a personal level but also for my wonderfully loyal and hard-working staff," stated.She said she had poured "tens of millions of pounds into the business" and given "every solution I feasibly could to keep it going, but sadly mine and my staff's efforts have been thwarted".Heather then went on to heavily criticise the meat industry and social media influencers for putting people off vegan food.Vegan food, which costs more than meat or dairy, has suffered as buyers struggle with rising food prices.Beyond Meat, which sells to McDonald's and supermarkets, reported a 33% drop in sales in August. Heck, the sausage producer, cut its meat-free offerings from eleven to two in May. Pret A Manger closed half its vegetarian and vegan-only stores last year.The Vegan Society estimates 700,000 vegans in the UK, and vegetarians like vegan meals.After VBites finance talks failed, Interpath Advisory appointed administrators on Monday.The company has factories in Peterlee, County Durham, and Corby, Northamptonshire.Interpath Advisory said the company will trade from Peterlee while it seeks a buyer for the business and its assets.It stated that 29 Peterlee staff members were being retained to assist with trading.Twenty-five Corby employees are also working for the joint administrators to process existing orders.The company has laid off 24 workers.James Clark, joint administrator and managing director at Interpath Advisory, said: "VBites is one of the UK's leading manufacturers of vegan food products but unfortunately, and in common with many other companies across the food manufacturing sector, had seen trading impacted by rising commodity and energy prices."

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VBites Goes Into Administration