This week, the woes of high-street store Debenhams have hit the headlines. As part of the administration process, the control of the department store has fallen into the hands of its lenders.
There are currently over 160 Debenhams stores in the UK with 50 branches delegated to close in the future. Sports Direct owner, Mike Ashley, made rescue offers to Debenhams but these were rejected in an on-going battle for control of the retail giant.
Debenhams has passed through a pre-pack administration process - which lets a company sell itself, or its assets, as a going concern, without affecting the operation of the business. The chain is now in the hands of its lenders.
Debenhams is one of many high-street shops that have gone into administration in the last 12 months. Last year, House of Fraser was rescued from administration by a bid from Mike Ashley in August. HMV called in administrators at the end of 2018 for the second time in six years, whereas Mothercare managed to avoid administration last summer by opting for a company voluntary arrangement (CVA) and has said it will shut 60 of its stores by June this year.
Patisserie Valerie has faced a turbulent few months after collapsing into administration at the end of January 2019 after talks with banks failed to save it from bankruptcy, following an investigation into alleged long-term fraud of its accounts. It was then rescued in February after its management team and Irish private equity fund, Causeway Capital, agreed to buy the café chain. In a rare move, the administration has been obstructed after creditors to the collapsed café chain rejected plans by KPMG to wind down the business.
However, other companies haven’t been as lucky and haven’t survived. Toys R Us went into administration in 2018 and closed all of its UK stores after failing to find a buyer for them. The toy store chain has been facing a £15m tax bill but poor sales made it unlikely that the payment could have been made.
Budget retailer Poundworld was another casualty, and closed all of its 335 stores on 10th August 2018 after falling into administration the previous month and failing to find a buyer. It had struggled with competition from rival stores such as Poundland and Poundstretcher.
Unfortunately, this isn’t a new phenomenon. In the past, big-named brands such as Woolworths, Comet, Blockbuster, BHS, Phones4U and many more have disappeared from the UK’s high street.
If you are a director of a company which has financial worries, the team at stevensdrake can help. Our insolvency team, headed up by specialist insolvency lawyer and partner at stevensdrake, Gavin Pickering, specialise in administration, liquidation and bankruptcy, asset sales, director’s duties and liabilities, as well as other insolvency services.
We act for creditors helping them achieve recoveries when their customers experience difficulties paying, in order to maximise their recoveries and maintain the income stream where possible. We provide practical advice to businesses and directors that are facing trading difficulties and advise directors on their own personal liabilities if pursued by creditors under guarantees or Insolvency Practitioners seeking recovery for the creditors of the insolvent estate.
Our team has been involved in some large actions for recovery brought about by the credit crunch and has experience in a wide range of industries. Find out more on our Insolvency page and get in touch with Gavin Pickering by emailing firstname.lastname@example.org or calling 01293 596976.