Harveys Furniture has gone into administration as it fails to find a buyer.
240 jobs have been immediately lost whilst 1,300 others are at risk. Harveys’ sister chain, Bensons for Beds was also put into administration, though it was bought out in a pre-pack administration by its private equity owner, Alteri Investors..
Administrators from PwC are looking for a buyer, which includes the purchase of its 20 stores and three manufacturing sites.
For now, its stores continue to trade but those in the industry believe a buyer is unlikely to be found.
Zelf Hussain, joint administrator at PwC said: ‘’the group had been facing increasingly challenging trading conditions in recent months, in particular Harveys furniture business. This has resulted in cashflow pressures, exacerbated by the effects of coronavirus on the supply chain and customer sales. It has not been possible to secure further investment to continue to trade the group in its current form.”
Since Harveys Furniture has gone into administration here is a quick guide to the legal realities of the administration process.
The Process: Administration is a legal “moratorium” that protects insolvent companies from creditor action. Licensed Insolvency Practitioners take control to either rescue the business or sell its assets to achieve a better result than immediate closure.
Who gets paid? There is a strict legal queue. Secured lenders (banks) and “preferential” creditors (employees and HMRC) are paid first. Unsecured creditors, including trade suppliers and customers, are at the back of the line and often receive nothing.
Employees: Redundancies often occur in the first 14 days. After this window, the administrator “adopts” remaining contracts, making ongoing wages a priority. Unpaid redundancy or notice pay can usually be claimed through the government’s Redundancy Payments Service.
Suppliers & Customers: Suppliers should negotiate “pro-forma” (upfront) terms for any new orders. For customers, gift cards and deposits are rarely honored. However, if you paid over £100 via credit card, you may be able to claim a refund under Section 75.
Written ByRobert Moore
Marketing Manager
Rob has over two decades of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.
Rob is now working with the Board at RMT to develop strategic marketing programmes to support the business plan and drive more company rescues.
