First retail ‘name’ to pop off 2018

[Tryke3]

House of fraser in trouble
http://www.cityam.com/282885/high-street-crisis-co...

[anonymous-user]

Conviviality on the brink of administration with 2600 jobs at risk.

https://www.thesun.co.uk/money/5924498/bargain-boo...

[Alpinestars]

Joey Deacon said:

Conviviality on the brink of administration with 2600 jobs at risk.

https://www.thesun.co.uk/money/5924498/bargain-boo...

Likely to be Tuesday unless something dramatic happens between now and then.

[Hub]

I didn't know 'Bargain Booze' was a chain. There is one near me that just looks like an independent off licence/convenience store and has the 'bargain' bit of the sign crudely removed. To be honest I am a bit surprised that the name of the store doesn't raise eyebrows these days anyway!

[condor]

Bargain Booze used to be a franchise off licence chain and probably still is.

[jas xjr]

condor said:

Bargain Booze used to be a franchise off licence chain and probably still is.

Mostly run by people that did not have a clue. Turnover rather than margin. The original franchisor told he made £1 for every case of beer that went into a store.
The underlying business should be sound but who knows what the borrowings are.

[55palfers]

http://www.bbc.co.uk/news/business-43580679

How can a company not realise they owe £30M in tax?

Their CEO has resigned - there's a gap on the who's who page of their website

https://www.conviviality.co.uk/about-us/our-manage...

On that very page, I am particularly fond of the words from the "Group People Director" - "Sarah is energised by the chance to develop a skilled and agile workforce that can work cohesively towards shared success."

[SydneyBridge]

As above, how the fk can a £30m tax bill be unexpected...

Seems a fairly good business on the face of it, supplying Wetherspoons etc.

[mouseymousey]

I believe Bargain Booze is a franchise amd conviviality is a supplier. BB should survive even if conviviality doesn't. Personally I love BB stores. Great selection and usually cheaper than supermarkets. Would much rather support a shop like that than a supermarket as well.

Conviviality has got pre pack administration written all over it. Usual tuck up by one of the big firms taking massive fees and new owner getting a bargain all whilst shafting thier suppliers and maybe some staff.

I hope they can sort it out although I don't understand why the unknown tax bill was 30m and they are trying to raise 130m.

[Alpinestars]

mouseymousey said:

I believe Bargain Booze is a franchise amd conviviality is a supplier. BB should survive even if conviviality doesn't. Personally I love BB stores. Great selection and usually cheaper than supermarkets. Would much rather support a shop like that than a supermarket as well.

Conviviality has got pre pack administration written all over it. Usual tuck up by one of the big firms taking massive fees and new owner getting a bargain all whilst shafting thier suppliers and maybe some staff.

I hope they can sort it out although I don't understand why the unknown tax bill was 30m and they are trying to raise 130m.

In which case you misunderstand the term pre-pack. The reason for many people misunderstanding the term is that businesses are reported as being bought for "a quid". What typically happens is that senior secured lenders are out of pocket. Therefore all other creditors are completely out of the money. The senior lenders take control of the group (ie, the equity) and are lined up to buy it at the same time as the administration, following a valuation, which in the scenario above would be less than the senior debt. Seniors would often welcome a bid above the value of their debt, but unfortunately the business is not worth more than the debt - but nothing stops someone making an offer for it. The pre pack reduces any negative impact on the business, ie, it's akin to the business changing ownership.

[mouseymousey]

Alpinestars said:

In which case you misunderstand the term pre-pack. The reason for many people misunderstanding the term is that businesses are reported as being bought for "a quid". What typically happens is that senior secured lenders are out of pocket. Therefore all other creditors are completely out of the money. The senior lenders take control of the group (ie, the equity) and are lined up to buy it at the same time as the administration, following a valuation, which in the scenario above would be less than the senior debt. Seniors would often welcome a bid above the value of their debt, but unfortunately the business is not worth more than the debt - but nothing stops someone making an offer for it. The pre pack reduces any negative impact on the business, ie, it's akin to the business changing ownership.

I understand how pre-packs work, what I don't understand is how they are fair or legal.

[loafer123]

mouseymousey said:

Alpinestars said:

In which case you misunderstand the term pre-pack. The reason for many people misunderstanding the term is that businesses are reported as being bought for "a quid". What typically happens is that senior secured lenders are out of pocket. Therefore all other creditors are completely out of the money. The senior lenders take control of the group (ie, the equity) and are lined up to buy it at the same time as the administration, following a valuation, which in the scenario above would be less than the senior debt. Seniors would often welcome a bid above the value of their debt, but unfortunately the business is not worth more than the debt - but nothing stops someone making an offer for it. The pre pack reduces any negative impact on the business, ie, it's akin to the business changing ownership.

I understand how pre-packs work, what I don't understand is how they are fair or legal.

What would you prefer to happen? Close the business down, fire the staff, sell the assets?

[Alpinestars]

mouseymousey said:

Alpinestars said:

In which case you misunderstand the term pre-pack. The reason for many people misunderstanding the term is that businesses are reported as being bought for "a quid". What typically happens is that senior secured lenders are out of pocket. Therefore all other creditors are completely out of the money. The senior lenders take control of the group (ie, the equity) and are lined up to buy it at the same time as the administration, following a valuation, which in the scenario above would be less than the senior debt. Seniors would often welcome a bid above the value of their debt, but unfortunately the business is not worth more than the debt - but nothing stops someone making an offer for it. The pre pack reduces any negative impact on the business, ie, it's akin to the business changing ownership.

I understand how pre-packs work, what I don't understand is how they are fair or legal.

In which case, with respect, you don't understand them. The options are;

- liquidation - returning money to the senior lenders and them not being paid in full, all other creditors get nothing, and everyone loses their job, or if they are lucky, they get TUPEd across if a business is sold.
- pre pack, to lenders or highest bidders. The business carries on, employees keep their jobs.

Lenders don't lend money to lose it. They expect up get it back. In an insolvent situation they won't get paid in full. Who's that unfair on?

[Alpinestars]

User33678888 said:

Companies don't just run out of cash or forget hefty duty bills. The senior management have surely been cooking the books on an industrial scale if no bank will loan them the cash they need for the 'forgotten' duty bill. Fraud has likely taken place, but this being the UK it's improbable that anything will actually be done about it.

They do.

Put yourself in a lender's shoes. Would you lend the company more money on top of what they have, and potentially rank behind the existing lenders?

Even the shareholders didn't want to put (enough) money in.

[User33678888]

I perhaps wrongly assumed that a business turning over £1.5B could fairly easily borrow £30m. It's only a week of income to them if the numbers they state are accurate. Something doesn't add up.

[skwdenyer]

User33678888 said:

I perhaps wrongly assumed that a business turning over £1.5B could fairly easily borrow £30m. It's only a week of income to them if the numbers they state are accurate. Something doesn't add up.

If all the assets are pledged to other lenders, who may in addition have a veto over new debt, then the game has slightly different rules.

[Alpinestars]

User33678888 said:

I perhaps wrongly assumed that a business turning over £1.5B could fairly easily borrow £30m. It's only a week of income to them if the numbers they state are accurate. Something doesn't add up.

Turnover is not net cash inflow. Remember Carillion?

It's owners, who stand to lose the most, didn't want to put the money in. Why would you expect a lender to? It's not unusual for businesses to run out of money. Lehman is a great example of a company who filed for Administration because it was not able to meet its debts, yet it has returned over 100% to its creditors. That's cashflow for you.

[anonymous-user]

Alpinestars said:

Turnover is not net cash inflow. Remember Carillion?

It's owners, who stand to lose the most, didn't want to put the money in. Why would you expect a lender to? It's not unusual for businesses to run out of money. Lehman is a great example of a company who filed for Administration because it was not able to meet its debts, yet it has returned over 100% to its creditors. That's cashflow for you.

You don’t by chance work for a mr T L do you ?

[SebastienClement]

Changing the topic slightly...

Last week Kerryfresh / Fresh to store ceased trading suddenly. They supplied fresh food to the convenience sector - and had some BIG contracts including large names like WHSmith, Boots etc...

Tescos must be absolutely laughing their socks off at the moment having bought Bookers. P&H have gone, fresh to Store gone...

That doesn’t leave a whole lot of competition in the convenience supply sector.

What’s the alternative to Bookers? I can only think of NISA.

[Alpinestars]

Brooking10 said:

Alpinestars said:

Turnover is not net cash inflow. Remember Carillion?

It's owners, who stand to lose the most, didn't want to put the money in. Why would you expect a lender to? It's not unusual for businesses to run out of money. Lehman is a great example of a company who filed for Administration because it was not able to meet its debts, yet it has returned over 100% to its creditors. That's cashflow for you.

You don’t by chance work for a mr T L do you ?

I'm a fellow partner of TL.