December News RoundUp - What's happened recently in the world of insolvency and administration?

Remember when this was literally the party season?


Our December administration News Round-up

Moss Bros

Not just for individuals going to their office and work holiday get-togethers and Christmas parties but also for the hospitality industry hosting them and the retail sector supplying their fancy new party clothes and Secret Santa gifts. 

 

We’ve written a lot about the toughest year a lot of businesses have ever had to face and while the good news about vaccines means that there will be an end to the pandemic, nobody knows when that will be. 

 

In the meantime, they will have to juggle with ongoing regional lockdowns of varying degrees of severity, continuing uncertainty about what’s going to happen with Brexit and understanding that the temporary Coronavirus support scheme will be closing early in 2021 and that the Bounce Back Loan scheme and CBILS will need to begin to be repaid. 

 

Against this background, it’s been easy to miss some of the biggest insolvency and administration stories that happened this month so allow us, for the last time in 2020, bring you up to speed. 

 

Arcadia

The parent company of Topshop, Topman, Wallis, Dorothy Perkins, Burton and Miss Selfridge, announced they were going into administration at the beginning of the month and placing 13,000 jobs in jeopardy – with 9,000 employees still remaining on furlough. 

Administrators said that the pandemic had severely impacted sales and that stores would continue to trade in the short term with no redundancies announced while a buyer was sought. 

 

Debenhams

Not one bombshell but two. Following the news from Arcadia, we learned that following the collapse of takeover talks with JD Sports that Debenhams announced that they would begin a liquidation process, cementing a bleak Christmas for their remaining 12,000 employees and the landlords of their 122 UK stores. 

The company had already gone into administration in April and JD Sports were widely seen as the last remaining credible buyer at this time. 

The administration of Arcadia exacerbated the circumstances as Debenhams and Arcadia remained each other’s largest customers through concessions and other trade. 

 

BonMarche

Hope for a stronger Christmas trading period was dashed for the women’s clothing chain  as they went into administration for the second time in just over a year placing 1,500 jobs and 225 stores at risk. 

A spokesperson for the administrators said: “Bonmarche remains an attractive brand with a loyal customer base. It’s our intention to continue to trade whilst working closely with management to explore the options for the business.”

 

Moss Bros

Less than six months after they were acquired in a takeover deal, the men’s suit supplier has launched a CVA as they look to restructure their fixed cost base. 

 

WIth weddings and other events severely curtailed by Covid-19 this year, the brand saw their revenues hit as a result. 

 

Chief Executive Brian Brick said: “Prior to the Covid-19 pandemic the group was trading robustly versus last year, despite operating in a challenging business environment. 

 

“At the outset of the pandemic, we managed to reduce costs and furlough staff in order to survive the first lockdown. There was then a glimmer of hope as we began to reopen some stores in the summer period, but even then trading was severely impacted, footfall was extremely low and sales were substantially down on the previous year. 

 

With the introduction of further lockdown measures, and with the outlook for trading remaining depressed, the group now faces no alternative but to try and limit our fixed costs and we have therefore made the tough but essential decision to undertake a CVA in order to protect the future of our business and people.”

 

The CVA was accepted by creditors and landlords so this will bring some short-term certainty to the brand going into 2021. 

 

Lloyd Shoe Co

The fallout from the administration of Arcadia spread to their supplier Lloyd Shoe Co who announced their administration. 

 

The group employs 243 people and has concessions in several Arcadia stores. The group is continuing to trade and says they will work closely with Arcadia’s administrators whilst seeking a buyer for their own business. 

 

Jascots

UK-wide wine suppliers Jascots appointed administrators at the beginning of the month hoping to find a new buyer or continuing to trade until their wine stocks have been entirely sold. 

 

A spokesperson said: “The challenges of Covid on an on-trade only wine supplier have proven too hard to endure despite the exceptional effort of a very talented team. They specialize in representing environmentally conscious and sustainable small growers. 

 

Miles MacInnes, managing partner said: “Our sales went from 85% of normal on Friday 13th March to zero on Tuesday 17th. We then turned into a home-delivery wine merchant overnight and eventually saw private client sales rise to contribute almost a quarter of our normal sales. 

 

Despite this promising business pivot, the second lockdown and additional regional restrictions on restaurants and bars proved to be an insurmountable obstacle.

 

Yorkshire Energy runs out of power

The challenger supplier, also known as Daisy Energy, had 74,000 customers but has ceased trading after two and a half years. 

 

Under Ofgem’s safety net, these customers’ gas and electricity supply will continue uninterrupted and any outstanding credit balances will also be protected while Ofgem transfers them to Scottish Power, which it chose to receive and service the remaining customers. 

 

CEO Annie Faulder said: “We have sadly begun proceedings to cease trading. We’ve operated since day one with the simple values of transparency and honesty, paying out renewable obligations on time and having customer service that we’re proud of. 

 

They join Effortless Energy and Tonik Energy in ceasing to trade this year. 

 

Bleak December for paper companies

 

119-year-old Wood Mitchell Printers of Stoke-on-Trent opened Herbert Mitchell, the father of the man who designed the Spitfire went into voluntary liquidation last week. It had a pension deficit of £7.7m compared to trade debts of only £60,000. 

 

Large-format printers Retail Print Solutions based in Leicester also went into voluntary liquidation with total debts of £2.7 million of which over £200,000 was owed to HMRC.

 

Another large-format printer, Odessa UK, agreed a CVA due to experiencing an “unsustainable downturn in business over the past several months due to the Covid-19 pandemic.”

 

Company director Bob Charles said: “We applied for and had accepted a CVA with HMRC being the major creditor. This was allowed to proceed due to the high percentage offered within the CVA with 100% of creditors voting in favour. 

 

“Being in a position to spread the debt owed, over a longer period of time will offer the opportunity to recover the business to previous trading levels and profitability over the coming years. 

 

“Our structure for recovery is based on the exiting of two of our four premises and we have unfortunately had to make the sad decision like so many of our competitors, to reduce head count until trading returns to more sustainable levels.”

 

Coombs

 

Coombs, one of the oldest building companies in Kent, went into administration this month. 

 

A spokesperson for the 49-year-old business said: “Over the course of the last year the trading position of the company deteriorated and the situation was exacerbated by the pandemic. 

 

“The directors had been seeking investment to enable the company to continue trading, but it was not until the end of October that the investors confirmed they would not proceed. 

 

“The directors then took specialist advice and were advised that the company should cease trading and be placed in administration.”

 

Local experts think the knock-on effect will be bad for the area as smaller companies down the supply chain will be affected, less houses will be built as a result and that the remaining building companies will be less likely and capable to tackle larger scale projects. 

 

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. 

 

We’ll arrange a free initial consultation with you when it’s convenient to discuss what your company is up against. 

 

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 see in 2021.

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