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Austin Reed Group to go into CVA

1 December 2014

Reports over the weekend revealed Darius Capital, the company which owns the retailer, Austin Reed, is considering going into a Company Voluntary Arrangement (CVA) to reduce its debt. According to the Group’s management (who also own Viyella and Country Casuals - CC), the decision could be made after the busy festive period and sales.

Figures from Companies House show Austin Reed made a pre-tax loss of £1.29 million in the year to January 2014, with sales of £109 million. 

The company is currently in talks with Deloitte over the restructuring method which involves spreading out debt repayments over a few years (with some debt partially written off). The business would continue trading while it has a chance to improve cashflow, cut costs and avoid any potential legal action. Part of the restructure would likely involve several shop closures out of the 260 stores across the country.  
The first Austin Reed store opened in 1900 and has provided custom to Winston Churchill, HM The Queen and Christine Lagarde.

A company voluntary arrangement could save this British tailor from entering administration and all legal action could be avoided. With the business being able to continue, management can focus on improving overheads and strategy.  

For struggling retailers, a CVA can be a powerful tool to determine lease obligations and negotiate repayment with lenders. For more information, see our retailer rescue page 
When a company goes into administration, money will likely be owed to different groups of creditors such as lenders, landlords and employees, but in a specific order. This is known as order of priority. See our infographic for more details

UPDATE - 19th January 2015: The company's plans to go into a CVA could result in 31 loss-making stores closing plus a £3 million cash injection from the company's shareholders. The other 166 stores would continue to trade while the firm takes part in discussions with landlords over rent reductions. 
The landlords will vote for or against a CVA on the 5th February. 

UPDATE - 6th February 2015: CVAs have been approved by more than 95% of creditors for both County Casuals and Austin Reed. Unfortunately, 26 CC stores and 9 Austin Reed stores will close, however this number could have been far bigger if the Group only had administration as an option. 

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