2019 Retailers in trouble thread
Discussion
Brooking10 said:
Alpinestars said:
That in itself is a bit misleading. The interest is rolled up and would have been paid on exit, so put no strain on the trading/cash flows of the business.
It sounds like an uber CVA to me, where certain leases are being dropped through a pre-pack.
It sounds like an uber CVA to me, where certain leases are being dropped through a pre-pack.
It is.
Alpinestars said:
That in itself is a bit misleading. The interest is rolled up and would have been paid on exit, so put no strain on the trading/cash flows of the business.
It sounds like an uber CVA to me, where certain leases are being dropped through a pre-pack.
I was surprised to see how low the IR is on the debt. I copied the note from the accounts previously. It shows that £18m is non interest bearing, £6m is at 6% and £5m is at LIBOR +4It sounds like an uber CVA to me, where certain leases are being dropped through a pre-pack.
That isn't particularly expensive debt. In fact, it is quite cheap given the state of the company at the time the loans were made.
But I missed a later note that shows, if nothing else, that the Finance team hasn't been 100% on the ball
I hope it can come through in one form or another. It is a decent brand and the stuff they have made for the brand is, generally, decent gear.
JPJPJP said:
I was surprised to see how low the IR is on the debt. I copied the note from the accounts previously. It shows that £18m is non interest bearing, £6m is at 6% and £5m is at LIBOR +4
That isn't particularly expensive debt. In fact, it is quite cheap given the state of the company at the time the loans were made.
But I missed a later note that shows, if nothing else, that the Finance team hasn't been 100% on the ball
I hope it can come through in one form or another. It is a decent brand and the stuff they have made for the brand is, generally, decent gear.
It’s been prepacked back to Bluegem That isn't particularly expensive debt. In fact, it is quite cheap given the state of the company at the time the loans were made.
But I missed a later note that shows, if nothing else, that the Finance team hasn't been 100% on the ball
I hope it can come through in one form or another. It is a decent brand and the stuff they have made for the brand is, generally, decent gear.
As Alpine says it’s a cost base reset exercise.
survivalist said:
The Li-ion King said:
classicaholic said:
LONDON (Reuters) - Britain’s Marks & Spencer (MKS.L) reported on Wednesday a 17% drop in first-half profit, dragged down by falling clothing sales, illustrating the bumpy path of its latest attempt at a turnaround after over a decade of false dawns.
Its all the fault of PH!
Lol falling clothes sales... it's tunaround has been a failure, I last went in an M&S in Basingstoke, at about 4:30 in the afternoon and the place was almost deserted. Garish coloured clothes in shiny material, like what you'd see if buying a really cheap suit. As I approached the till wanting a refund for some badly fitting trousers, bored staff suddenly spring into life like a computer in sleep mode if you accidentally knock the desk. Cannot even make a basic pair of trousers, trying way too hard. Even Tesco and Sainsburys are making a better attempt with clothes.Its all the fault of PH!
M&S do a form of online shopping but you often have to come into the store for Click & Collect... they might want to rethink the tagline "Clothing The Nation" as it looks like the Nation are shopping elsewhere
Poor bloke modelling these trousers probably can't bend his legs anymore in case the trousers tear, as the construction is shoddy
I can only assume that volumes are dropping and they are trying to increase margins while dropping prices.
The nation are shopping at ASOS and BooHoo - at least there the expectation matches the reality - cheap stuff that won’t last 6 months. But at least it’s priced to match.
ETA - and John Lewis own brand. We were there last weekend getting kids shoes so I tried a few suits on. Laughable for the price. £250 for a Jacket and £120 for trousers but such poor quality it felt like a chinese knock off.
Edited by survivalist on Thursday 7th November 20:13
People can buy a decent Cavani 3 piece suit off Ebay for £100, so I think most will look elsewhere.
Mothercare closes completely next Tuesday, cue frenzy at stores this weekend
valiant said:
eccles said:
I recently had to buy a new suit, and in the past, Marks and Sparks has been my first port of call. Went into my local fairly large branch and the selection was a fraction of what it used to be, with very limited sizes and totally disinterested staff when asking a few questions.
I bought my last suit in the same branch 8 years ago and it was a completely different experience.
Recently had the same experience.I bought my last suit in the same branch 8 years ago and it was a completely different experience.
Needed a black suit and as I rarely need the use of a suit on a daily basis I wanted something decent but not stupidly expensive or cheap tat. Typical M&S ground.
Nothing. One range where they were cheap but looked cheap on the hanger, never mind actually wearing it. Looks like it was aimed at the Primark customer but not realising that a Primark customer will not bother with M&S from the outset.
Years ago, you could walk in and be overwhelmed with their range. Now? It’s a lottery whether they have anything approaching what you want. Pity, as they have plenty of options online but the stores can’t compare.
Alpinestars said:
JPJPJP said:
Restructuring advisers have had more out of it than shareholders recently!
Hope they got it right this time
“They” being the shareholders and their advisors. They don’t just do it in isolation, as you know. Hope they got it right this time
But to be fair, not many CVAs have been a success.
It's not an argument of extremes, to say the only alternative is to leave businesses with a chance of success to die, though the answer can't be to let the people who make the mistake just carry making them, either.
I like the M&P product, but that's neither here nor there.
On the flip side of that, I am surprised at how little initial and ongoing due diligence many companies do on their customers. And how much credit / forgiveness can be had by some companies from their suppliers
In the case of a retailer that did go skint (and was bought out of administration rather than CVAing), it is a fact that one of it's suppliers - which supplied it with approx £12k per month of stock - continued to supply on normal terms for 13 months without being paid one penny piece. It got nothing at all from the administration either.
So that was £200k spaffed, not to mention the fury of the rest of the customers who had been paying their bills whilst competing with the non payer's ultra low retail prices throughout the period!
In the case of a retailer that did go skint (and was bought out of administration rather than CVAing), it is a fact that one of it's suppliers - which supplied it with approx £12k per month of stock - continued to supply on normal terms for 13 months without being paid one penny piece. It got nothing at all from the administration either.
So that was £200k spaffed, not to mention the fury of the rest of the customers who had been paying their bills whilst competing with the non payer's ultra low retail prices throughout the period!
janesmith1950 said:
I'm far from being left wing, however I'm not sure I agree with the principle, that a business can be run badly and lose money, then use a pre pack to jettison the bad business decisions (in this case stores in unprofitable locations) and force the creditors to take the haircut whilst the remaining business goes on more or less as if nothing's happened.
It's not an argument of extremes, to say the only alternative is to leave businesses with a chance of success to die, though the answer can't be to let the people who make the mistake just carry making them, either.
I like the M&P product, but that's neither here nor there.
What would you suggest instead of a PP?It's not an argument of extremes, to say the only alternative is to leave businesses with a chance of success to die, though the answer can't be to let the people who make the mistake just carry making them, either.
I like the M&P product, but that's neither here nor there.
Alpinestars said:
What would you suggest instead of a PP?
If I had the answer, I'd have enough cash not to be discussing it on here...What can't be right is allowing BODs to effectively run large retailers on repeated years of trading losses, then allowing them to use hindsight to wipe clean their gambles and ask creditors to pay for those gambles.
I'm a pragmatist and a believer in free market economics- sometimes that conflicts- as I believe if the business can be saved it should, however I also believe failures should be allowed to fail and whatever is stronger/better can take its place.
janesmith1950 said:
Alpinestars said:
What would you suggest instead of a PP?
If I had the answer, I'd have enough cash not to be discussing it on here...What can't be right is allowing BODs to effectively run large retailers on repeated years of trading losses, then allowing them to use hindsight to wipe clean their gambles and ask creditors to pay for those gambles.
I'm a pragmatist and a believer in free market economics- sometimes that conflicts- as I believe if the business can be saved it should, however I also believe failures should be allowed to fail and whatever is stronger/better can take its place.
CVA however has, in my opinion, become far more commoditised.
When a BOD comes to an IP and says “we want a CVA” straight off the bat then you know something has gone wrong with the process.
The Li-ion King said:
Everyone seems to like "Slim Fit" which means most pairs of trousers are so uncomfortable at the knees and thighs as they taper in too much... since when did trousers have to resemble leggings? M&S, late to the party are trying to copy Burton, Next, TopMan and others... but their offering is Vauxhall quality at Audi prices.
This 100%. What the hell is this obsession with trousers that make you look like a beanpole? I want trousers with a bit of room to move in the leg - and don't get me wrong, I'm 6'3" and 80kg so I have slim enough legs but I don't want to look like a gawky teenager. But can I find trousers that suit me anywhere on the high street? Can I f
k, not since M&S started trying to follow this trend too.janesmith1950 said:
If I had the answer, I'd have enough cash not to be discussing it on here...
What can't be right is allowing BODs to effectively run large retailers on repeated years of trading losses, then allowing them to use hindsight to wipe clean their gambles and ask creditors to pay for those gambles.
I'm a pragmatist and a believer in free market economics- sometimes that conflicts- as I believe if the business can be saved it should, however I also believe failures should be allowed to fail and whatever is stronger/better can take its place.
It sounds to me like you don’t understand the PP process and economics. What can't be right is allowing BODs to effectively run large retailers on repeated years of trading losses, then allowing them to use hindsight to wipe clean their gambles and ask creditors to pay for those gambles.
I'm a pragmatist and a believer in free market economics- sometimes that conflicts- as I believe if the business can be saved it should, however I also believe failures should be allowed to fail and whatever is stronger/better can take its place.
Alpinestars said:
It sounds to me like you don’t understand the PP process and economics.
I understand it fine. I'm not here to win a bragging competition on the internet (I've built and sold companies, so what?). PPs are not without controversy and that is well known and accepted. If they were perfectly normal and generally thought of as reasonable they wouldn't have gained that reputation in the first place.
Allowing a company to make bad decisions that would otherwise lead to it's demise and allow the same BOD to jettison the cost of those bad decisions and let the creditors pay for them is morally difficult to swallow.
I don't dislike it because I don't understand; I don't like it because I think it's wrong in principle (unless the circumstances are exceptional).
janesmith1950 said:
I understand it fine. I'm not here to win a bragging competition on the internet (I've built and sold companies, so what?).
PPs are not without controversy and that is well known and accepted. If they were perfectly normal and generally thought of as reasonable they wouldn't have gained that reputation in the first place.
Allowing a company to make bad decisions that would otherwise lead to it's demise and allow the same BOD to jettison the cost of those bad decisions and let the creditors pay for them is morally difficult to swallow.
I don't dislike it because I don't understand; I don't like it because I think it's wrong in principle (unless the circumstances are exceptional).
A company broadly goes into administration because it has defaulted on secured loans or its insolvent (unable to meet its liabilities as they arise). In the first case, a secured creditor is exercising his rights against the loan - no different to your mortgage company repossessing on a default - that is an example do a pre pack. In the second case, the directors could continue trading and racking up further creditors who won’t get paid. I assume you have no issue in either case for a company to be put into administration? PPs are not without controversy and that is well known and accepted. If they were perfectly normal and generally thought of as reasonable they wouldn't have gained that reputation in the first place.
Allowing a company to make bad decisions that would otherwise lead to it's demise and allow the same BOD to jettison the cost of those bad decisions and let the creditors pay for them is morally difficult to swallow.
I don't dislike it because I don't understand; I don't like it because I think it's wrong in principle (unless the circumstances are exceptional).
If the company is insolvent there are a number of potential routes. It is not either A or B as you present above.
It's controversial when the owners of the insolvent company form a NewCo, buy the 'good' assets and continue more or less as if nothing's happened, minus the obligations.
True, the IP can investigate the prior behaviour of the directors, though this is post-sale, which may lead to sanctions (particularly if HMRC are on the wrong end of it). My concern is that directors and owners, knowing there is the option of a pre-pack in the future, may behave differently (take larger risks at the expense of creditors) than they would do if this wasn't an option on the table.
In other words, the existence of pre-packs may encourage the kind of behaviour than makes insolvency more likely, with a parachute available if the BoD are wrong, at the expense of creditors.
I have no problem with others feeling different about it, each case will be on its own merits.
It's controversial when the owners of the insolvent company form a NewCo, buy the 'good' assets and continue more or less as if nothing's happened, minus the obligations.
True, the IP can investigate the prior behaviour of the directors, though this is post-sale, which may lead to sanctions (particularly if HMRC are on the wrong end of it). My concern is that directors and owners, knowing there is the option of a pre-pack in the future, may behave differently (take larger risks at the expense of creditors) than they would do if this wasn't an option on the table.
In other words, the existence of pre-packs may encourage the kind of behaviour than makes insolvency more likely, with a parachute available if the BoD are wrong, at the expense of creditors.
I have no problem with others feeling different about it, each case will be on its own merits.
janesmith1950 said:
If the company is insolvent there are a number of potential routes. It is not either A or B as you present above.
It's controversial when the owners of the insolvent company form a NewCo, buy the 'good' assets and continue more or less as if nothing's happened, minus the obligations.
True, the IP can investigate the prior behaviour of the directors, though this is post-sale, which may lead to sanctions (particularly if HMRC are on the wrong end of it). My concern is that directors and owners, knowing there is the option of a pre-pack in the future, may behave differently (take larger risks at the expense of creditors) than they would do if this wasn't an option on the table.
In other words, the existence of pre-packs may encourage the kind of behaviour than makes insolvency more likely, with a parachute available if the BoD are wrong, at the expense of creditors.
I have no problem with others feeling different about it, each case will be on its own merits.
I’m going to reiterate that it sounds like you don’t know the process. It's controversial when the owners of the insolvent company form a NewCo, buy the 'good' assets and continue more or less as if nothing's happened, minus the obligations.
True, the IP can investigate the prior behaviour of the directors, though this is post-sale, which may lead to sanctions (particularly if HMRC are on the wrong end of it). My concern is that directors and owners, knowing there is the option of a pre-pack in the future, may behave differently (take larger risks at the expense of creditors) than they would do if this wasn't an option on the table.
In other words, the existence of pre-packs may encourage the kind of behaviour than makes insolvency more likely, with a parachute available if the BoD are wrong, at the expense of creditors.
I have no problem with others feeling different about it, each case will be on its own merits.
An IP HAS to market the assets/company before selling (pre-packing). He has to get the best deal for creditors as a whole.
The assets are open for any of us to buy.
The “buyer” is normally a creditor.
The equity (owner) normally loses out, often entirely.
It’s then up to the new owner to appoint whatever management he/she wants to.
There will no doubt be cases of abuse, like in all walks of life.
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