Are you a retailer with serious financial problems?
Rents due for payment and sales falling due to the Covid-19 Pandemic? Do you have some poorly performing shop units and cannot get rid of the rent liabilities?
Talk to us now about how we can help multiple retailers and other types of retail business restructure and cut loss making activity.
In the last couple of years many High Street names have failed.
It seems too that when times get tough the marginal or secondary site stores suffer most, so how do you get rid of those?
Without resorting to shareholders for capital or debt/bond facilities, many larger groups are entering protective insolvency, closing stores or trying to survive by restructuring.
Fragility is the order of the day for undercapitalised companies. Having to meet bank covenants, rent quarter days and pay VAT /PAYE when due, are impossible juggling acts to achieve when making a loss.
The increase in business rates, which many firms in built up cities are experiencing, due to Government changes, are also not helping.
So how can KSA Group help a retailer restructure?
Where a retail group has a number of badly performing stores but the remainder are viable/profitable then it is enormously difficult to stop the haemorrhage of cash (even if the bad stores are shut down, rent and overheads are still payable). Normally a retailer can only hope that the landlord will let the company assign or surrender the lease, obviously the landlords business requires tenants paying rent, not empty properties. Too many vacant properties could mean that their business model is not viable.
With the inherent power of the lease they will be very unlikely to allow surrender without a price being paid. Even assignment may lead to future problems if the assignee is not financially strong.
With use of a company voluntary arrangement (CVA) we have assisted companies with exiting their non performing properties and shopping centres. Additionally, we have helped terminate formal leases, therefore crystallizing the liability. Rent payments are terminated and landlords are prevented from taking recovery action.
Often, we are asked - how can this approach work?
It is essential that the proposals are cogently structured and careful financial forecasts are formulated in support of the CVA proposal. Following this, detailed negotiations must begin with landlords to seek surrender or termination of the lease. If this is not forthcoming then the company should consider exiting the property before the CVA proposal is published and finalized.
KSA helps our clients with deal structure, turnaround management, building the proposals and forecasts, driving the deal with creditors and helping the board through the crisis.
Be aware that it is not usually necessary for Administration or Receivership to be used for this approach! Therefore it is cost effective and powerful with minimal cashflow consequences. Stock and fixtures (as long as not landlords improvements) can be used elsewhere in profitable stores.
Talk to us now, call Iain Campbell or Keith Steven for more details: 0800 9700539
Want to know more about KSA Group?
Retailer CVA Case Studies
- Midlands: £1m sales Bathroom and Kitchen Products
- London based Multiple Furniture and Design Retailer
Our furniture and design retailer client successfully exited their CVA in 2017. Below outlines a brief overview of its profit and loss account:
"Keith - we will gladly give anyone a glowing reference for KSA Group, what you achieved for our company was excellent. Now we are away from the high rent mall shops, our factory shops are doing really well. Without your help in re-organising the company's store mix and debt, I know that we would have gone into liquidation"
A quote from the managing director of a mid sized fashion chain with high street, mall and factory outlets, we closed all the non performing stores and helped him save his company. He will vouch for KSA Group's work, why not give us a call now? 0800 9700539 or you can call Keith Steven
Worried about poor cashflow? Feel you have got into a bit of a mess? Covid-19?, How to pay wages on pay day? For reassuring advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide includes updates due to Covid-19 For instance there have been some changes to insolvency legislation that limits creditors actions. A new 20 day moratorium for distressed businesses has also been introduced.