November Insolvency News Round Up
The Chancellor Rishi Sunak delivered a spending review which will have ramifications for their businesses in terms of support and tax liabilities.
The arrangements for Christmas will be announced by the four UK nations governments along with finding out the new Covid-19 tier status of every local authority in the country which will let some businesses know if they can open at all.
Others will find out what they can sell with various restrictions and one of the busiest shopping days of the year – Black Friday – is hours away.
With so much happening, it’s easy to miss some of the biggest insolvency and administration stories that happened this month but we’re happy to bring you up to speed.
Edinburgh Woolen Mill Group
Four of the UK’s top high street names owned by the same group all entered administration within a tumultuous two week period this month.
Edinburgh Woolen Mill and Ponden Home closed their physical retail stores on November 6 with the immediate loss of 860 positions. They are owned by the Edinburgh Woolen Mill Group is ultimately controlled by entrepreneur Phillip Day.
Less than two weeks later, two of the groups other central brands – Jaeger and Peacocks – also entered administration putting a total of 6000 jobs in jeopardy while administrators work to restructure and eventually sell the business to prospective buyers.
A spokesperson said: “Recent months have proven extremely challenging for many retailers, even those that were trading well before the pandemic, including the teams at EWM and Ponden Home.
“Regrettably, the impact of Covid-19 on the brands’ core customer base and tighter restrictions on trading mean that the current structure of the businesses is unsustainable and has resulted in redundancies.
They continued: “In recent weeks we’ve had constructive discussions with a number of potential buyers for Peacocks and Jaeger but the continuing deterioration of the retail sector due to the impact of the pandemic and second lockdown have made this process longer and more complex than we would have hoped.”
They confirmed that a “standstill agreement” had been secured with the HIgh Court that had temporarily put off administration but had expired.
“Therefore as directors we have taken the desperately difficult decision to place Peacocks and Jaeger into administration while those talks continue.”
Wheatsheaf Shopping Centre
It’s not just shops that are closing at the Wheatsheaf Shopping Centre in Rochdale, the whole centre is closing next month for good.
In recent years it has lost big anchor tenants including Argos, New Look, Wilko’s, Rymans, Brighthouse and Select but the news is still devastating to the remaining stallholders.
Charles Denby of MCR Property Group who manage the centre said: “The ongoing coronavirus pandemic has expedited the migration from traditional shopping habits and the impacts on the retail sector have been significant.
“Since reopening after lockdown in June 2020, footfall has been tracking at an average of 45% down year-on-year and this lockdown will impact these figures further. The financial viability of the centre is not sustainable.”
He continued: “Nationwide we continue to see a large number of retailers experiencing serious trading difficulties, and more are resorting to insolvency procedures to cut their rent bills.
“When the change in shopping habits collides with reduced income, an excess of space and cost structures that are simply no longer realistic, landlords have to take action.”
A silk company which had been trading in Suffolk for nearly 250 years has gone into administration with the loss of 32 jobs.
Vanners was founded in 1740 and moved to Suffolk in the late 18th Century when the county became the hub of the British silk weaving industry.
Still designing and manufacturing silk fabrics and products for the fashion and furnishing sectors, Vanners provided silk for Her Majesty Queen Elizabeth II’s coronation gown as well as more recently the singer Adele and former US First Lady Michelle Obama.
A spokesperson said: “Vanners had been experiencing difficult trading conditions for some time, which was exacerbated by the severe impact of Covid-19 on the fashion sector. We intend to fulfil outstanding orders while we seek a buyer for the business.”
The city-centre based Revolution Bars has entered a CVA which will see six of its sites close immediately.
While they anticipate that the group’s cash flow will improve over the two-year period of the arrangement, they said that the long-term impact of Covid-19 including a one-off £1.1 million cost, meant that they must consider all necessary options to ensure the business can remain viable.
Chief Executive Rob Pitcher said: “I’m grateful for the support of our creditors in approving the CVA which is a positive step in the right direction for the business.”
He also said that while he welcomed government support, the hospitality sector had been severely affected by it’s “often illogical, inappropriate and disproportionate response to the pandemic.
“To plan ahead, we still require guidance on how the sector can ultimately exit the current restrictions in a safe and timely manner.”
Abercrombie and Fitch
American bellwether fashion retailer Abercrombie and Fitch announced that it will be closing its flagship London store as part of an “ongoing global store network optimization initiative” that aims to reposition the brand from larger format, tourist-dependent flagship locations to smaller store that cater to local customers.
This cuts the number of “flagship” locations from 15 to 8 by the end of January 2021. CEO Fran Horowitz said: “As we approach the peak holiday selling period, inventories remain well-controlled and we have thoughtful plans in place to help us adapt to changing business conditions.
“As we have done since the start of the pandemic, we will utilize our proven playbooks to remain agile and provide the best omnichannel experience for our customers.”
Although it might be argued that the pandemic has rendered most retailers playbooks obsolete which is why so many are having to change their strategies and look for insolvency advice to survive.
One thing that can be guaranteed in this most inexplicable, unexpected year is that things will be busier in the remaining month of 2020.
Some companies will be made by the decision taken in the next couple of weeks but sadly some will also be broken if they cannot function normally because of local or national restrictions.
It can be hard to remain focused when there is so much happening but if you’re running a business and you feel like you’re running out of time and places to turn – there is a route available for you – and it always will be.
Once you get in touch we can give you our professional assessment on your available options including some ideas you might not have thought of yourself.
Time is critical right now so the sooner you get in touch, the quicker you can then act to protect and preserve your business but only if you act while you can. Some options are time limited and with an uncertain festive period ahead, these days and weeks ahead might be the difference between how you welcome in 2021.