Some Bonmarche stores may never reopen
April 2021
Many jobs are at risk at Bonmarché as administrators decide how many stores will reopen as non-essential retailers open their doors to the public today.
Previously the retailer was part of the group owned by Philip Day, but it collapsed in October. In December, Steve Simpson, Edinburgh Woollen Mill Group COO agreed a deal to take over 72 stores and 531 staff with backing from an international consortium.
RSM Advisory administrators have been reviewing the options of the retail estate throughout lockdown. Either all, or just some of the remaining 148 stores may never reopen.
What will happen today as shoppers are set to return?
December 2020
Just months after being brought out and around a year after first falling into administration and saved via a deal with Peacocks, the fashion retailer collapses again.
RSM Restructuring Advisory has been appointed to handle Bonmarches’ second administration. A rescue deal is to be sought. In the meantime, all 225 stores remain open and no redundancies are to occur.
The brand struggles with rising costs among dwindling footfall on UK high streets. The impact coronavirus and local/national lockdowns has brought has only worsened the issue.
This being said, Damian Webb, joint administrator of RSM Restructuring Advisory, stated: ”Bonmarche remains an attractive brand with a loyal customer base.”
He goes on to explain that they will work closely with management to explore options for the business.
”We will shortly be marketing the business for sale, and based on the interest to date we anticipate there will be a number of interested parties.”
November 2019
Update
Peacocks has been named the “preferred bidder” for the business, although further negotiations are needed before the deal is secured.
However, 30 Bonmarché stores will now be closed by 11 December, the administrators said, putting up to 240 jobs at risk.
Bonmarché’s 285 remaining stores will continue to trade.
Bonmarche, the women’s fashion chain specialising in clothing for those aged over-50, appointed administrators, FRP Advisory, leaving uncertainty for the company’s future.
The chains 318 UK stores will remain open whilst a buyer is sought – with 2887 jobs at risk.
Chief Executive of the Yorkshire-based chain, Helen Connolly, blames the tough High Street trading conditions for the tough decision she made, putting the firm into administration. As heard in the news, Bonmarche are not the first or only retailer to experience issues. They add to the long list of struggling high street retailers, such as New Look, Topshop’s Arcadia, House of Fraser and Debenhams
Both refinancing and a rescue deal, known as a CVA, had been looked into. However, they came to the conclusion that neither option would benefit the business and change the challenges being faced.
‘’We have spent a number of months examining our business model and looking for alternatives. But we have been sadly forced to conclude that under the present terms of business, our model does not simply work’’.
Supposedly, this comes as not too much a surprise since the struggling retailer warned earlier this year that trading was deteriorating. The company has gone into administration before, in 2012, when it was rescued by private equity firm Sun European Partners.
Despite the news, FRP Advisory reassured the public and all of Bonmarche’s internal stakeholders, including employees, that trading will continue, and no immediate redundancies will be made.
”There is every sign that we can continue trading while we market Bonmarche for sale and believe that there will be interest to take on the business.’’
If you are a worried employee, please see our guide here.
Navigating the Administration Process
Here is a breakdown of the legal framework and what it means for those affected.
1. What is a “Basic” Administration?
Administration is a powerful statutory process governed by the Insolvency Act 1986. It is triggered when a company is insolvent and can no longer meet its debts. An independent Licensed Insolvency Practitioner (IP) is appointed to take control from the directors. A key feature is the statutory moratorium—a legal “shield” that instantly stops all legal actions, such as winding-up petitions or bailiff visits, providing the “breathing space” needed to rescue the business or achieve a better result for creditors than immediate closure.
2. Who Gets Paid First?
The law dictates a strict hierarchy for the distribution of funds. Fixed charge holders (typically banks with security over property) are paid first. Once the administrator’s fees are covered, preferential creditors are next; this includes employees (for specific arrears) and HMRC for taxes like VAT and PAYE. Following these are floating charge holders, and finally, unsecured creditors—which include trade suppliers and customers—who are at the back of the queue and frequently receive only a small fraction of their debt.
3. What Happens to Employees?
Entering administration does not mean all jobs are instantly lost. For the first 14 days, the administrator assesses the company’s viability and may make redundancies. If a member of staff is kept on past this 14-day window, the administrator “adopts” their contract, meaning their ongoing wages and rights become a priority expense. Those made redundant can claim for unpaid wages and notice pay via the Redundancy Payments Service if the company has insufficient assets to cover these costs.
4. What About Suppliers and Customers?
Suppliers and customers are generally unsecured creditors. Suppliers should stop granting credit under old agreements and negotiate “pro-forma” (upfront) terms for any new supply to the administrator. For customers, deposits and gift cards are rarely honoured. However, those who paid over £100 via credit card may be protected under Section 75 of the Consumer Credit Act and should contact their bank immediately to initiate a claim.