LK Bennett filed a notice of intention to appoint administrators before Christmas. As such, it looks like the company is going into administration for the second time.
Following the last administration the firm was ultimately acquired by Rebecca Feng, who ran the brand’s franchises in China, through Byland UK. The estate was reduced to just 9 stores.
Following the acquisition, the firm initially experienced growth, expanding into new categories such as bridal wear, opening stores in key locations, returning to profitability and moving its flagship store and headquarters to Bond Street in London. However it looks like its success was shortlived.
LK Bennett, has 9 stores in the UK and employs 500 people. The company are struggling financially, and looking to close if no new funding can be found.
Problems on the High Street have been well documented recently with high rents and rates, uncertainty, and increases in minimum wages.
The Duchess of Cambridge has been a big fan of the brand and so to have been many middle class affluent shoppers. Ms Bennett was described as the “queen of the kitten heel” However this time it looks likely to be gone forever on the High Street.
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.
