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Debenhams, one of the centrepieces of every UK high street for generations, has gone into administration, just as it did last April.
This is the second time within 12 months the group has sought the legal protection from creditors and landlords that administration provides, while they seek to raise additional funds and renegotiate their leases and rent payments.
Debenhams also confirmed that it would be liquidating its remaining 11 stores in the Republic of Ireland.
The timing is critical as, like every high street retailer, they would be facing paying their second quarter rent payments. This would have been an exacerbating factor in Brighthouse and Laura Ashley announcing their administrations last week.
Any deal would most likely be in the form of a “pre-pack” sale, which is where a whole or part-sale of the business is already agreed with a purchaser allowing it to proceed quickly.
Another alternative would be for the company to enter into a Creditors Voluntary Agreement (CVA), which is what happened last time.
This agreement would allow the company to continue trading and would give creditors a higher chance of returns than a liquidation would when regular trading resumes after the lockdown is lifted.
It also keeps staff employed although the majority have been furloughed under the Coronavirus Job Retention Scheme (CJRS) and would automatically transfer over to any new company under TUPE.
The future for Debenhams and other retailers in a similar situation regardless of ownership could ultimately depend on the rent terms and relationship that can be negotiated and built up with their landlords.
Ironically one of the masters of this approach is Mike Ashley of Sports Direct who tried to buy Debenhams the last time it was in administration.
He’s successfully managed to increase his portfolio of high street brands by renegotiating more favourable terms with landlords, and this is something that any existing or future owner should also look to do to give it the best chance of survival in an uncertain and unpredictable rest of 2020.
Another lauded high street name is also facing a bleak immediate future. Cath Kidston has filed notice that it intends to shortly appoint administrators.
Despite a recent uptick in online sales with a new ecommerce platform, the coronavirus lockdown has derailed any recovery momentum that had been generated.
The brand had been struggling before the shutdown and had seen both declining revenue and footfall at it’s 60 UK locations.
If they choose to try and remain a physical retailer then like others their survival may depend on the rent terms and relationship they can build up with their landlords.
Otherwise, an alternative model such as in-store concessions or online-only might be the only viable route of keeping Cath Kidston and the vibrant, colourful print designs that put them on the map, alive for consumers to enjoy again in the future.
The hospitality sector will also be one of the hardest hit by the coronavirus lockdown and even a famous name and impeccable pedigree might not be enough to weather the storm the last few weeks has brought.
Mark Hicks, the original winner of the BBC’s Great British Menu show and who was awarded an MBE in 2017 for services to hospitality and catering, has placed his dining empire into administration.
Both the parent company, WSH, and sub-brands Mark Hix Restaurants, Restaurants etc and Hix Townhouse have all filed, leaving the six high profile London venues closed for good unless new owners emerge.
Basset and Gold
Usually signing a sponsorship deal with a Premier League football club is a golden ticket.
As well as seeing your company’s name and logo all over the sleeves of some of the most expensive players in the best-watched league in the world, you get the glamour of association.
Basset and Gold were a financial investment and trading company and had sponsored the sleeves of West Ham United’s kit since the beginning of the 2018/19 season.
Sadly the coronavirus lockdown ending the Premier League season indefinitely coincided with other concerns around their main venture of mini-bond trading and short-term loan lending.
The company said: “B&G Plc and B&G Finance took independent solvency advice after the Financial Conduct Authority (FCA) raised concerns about the viability of the B&G mini-bond scheme because money raised from the mini-bonds was almost entirely invested in (short-term loans lender) Uncle Buck.
“In light of this advice, and following the entry into administration by Uncle Buck, the directors concluded that both of the firms were insolvent and took the necessary steps to place the firms into administration.”
The sponsorship deal with the Hammers was due to end at the end of the season regardless but when football resumes they will be playing again those famous claret and blue sleeves will be logoless.
While the main news appears to be nothing but coronavirus lockdown and response, businesses continue to fight for their existence.
Time hasn’t stopped and bills continue to come due and have to be paid. This can be a struggle for even the most well-run and profitable business but even they could do with a helping hand right now.
This is where we come in.
Once a business owner or director gets in touch to arrange a free virtual consultation with one of our team of experienced expert advisors, we prove our worth by creating a realistic strategy with them to give them their best shot of getting back on track and underway the minute they are allowed to reopen their doors.