The listed Yorkshire business, United Carpets, has been bought out of administration in a pre-pack deal.
UCN is the principal trading company of the United Carpets group, owning its corporate stores and also acting as franchisor of the group's franchises. Once the business was put into administration at the same time the assets were sold to which was a wholly owned subsidiary of the company. They owned 72 stores. They are now looking to agree substantial reductions on the rent at these stores so they can continue to trade. So why did not they not go for a CVA? The reason is probably simply that the landlords were the major creditors and they would not have been able to get 75% of the landlords to agree to a CVA. This meant that an administration process was the only option. If United Carpets (Franchisor) Ltd cannot agree with the landlords then they will shut the store. Either way the landlords are between a rock and hard place.
In a statement the company said; "The board is disappointed at the need to take these steps but is confident that the core of locations remaining once the restructure is concluded will, with appropriately adjusted overheads, provide the foundation for a successful and sustainable business."
If you want to know more about a pre pack administration then look at our site. A pre pack is one of the options facing an insolvent but viable company but a CVA can often be used in these circumstances depending on the creditor profile.
See our article on accounting web about pre packs and CVAs which seeks to explain the differences and benefits of each mechanism
Categories: Pre Pack Administration Process and Procedures