Another day, another retail insolvency – House of Fraser
1992 might have been the Queen’s “annus horribilis”, but 1992, it was also the start of the era of celebrity endorsement and the rise of “Designer” brands being more accessible to the ordinary “punter”. House of Frasers, at least in my home city, was the destination of my weekend shopping pilgrimages, with its cutting-edge Beauty trends and higher-end clothing offering.
2018 has certainly been High Street Retail’s “annus horribilis”, with, sadly, House of Fraser being its latest casualty. The Company’s press release this morning has indicated that it has, or will, shortly, lodge with the Court a Notice of Intention to Appoint, the accountants at EY, as its administrators.
They have indicated that the administrators will continue discussions with interested parties to try to sell some or all of the business. It certainly looks as if the administrators are intending to sell the business at or very soon after, their appointment, and that a sale of the assets to those interested parties, on a solvent basis (even with the benefit of a CVA being in place) was unachievable. This speed has echoes of an evolution of the much repudiated “pre-pack” process, but we will wait and see what happens.
What is certain at the moment is that the employees, landlords and creditors will enter a period of uncertainty, hoping that jobs will be preserved and supply chains not too badly affected.
UK High Street has taken an absolute battering this year, with House of Fraser, its latest casualty. Its’ management team, acknowledged at the earlier CVA meeting, when it obtained creditor buy-in to a rescue proposal, that its portfolio of stores and square footage simply didn’t match the profile required to compete on UK High Street. They also acknowledged that they had been late to the party in respect of their online offering and that they had plans to “re-connect” with its customer base”. It was clearly too little too late.
Hopefully, the interested parties will be able to conclude a deal, where they able to retain the core key assets of House of Fraser and that some jobs will be preserved and the business will have a future. That is going to be cold comfort to the Landlords and Employees affected today but inevitable store closures.
The time has surely come for Government (local and national) to address the difficulties on the High Street, with a more holistic approach to Business Rates and tax structures for “bricks and mortar business” as opposed to their online cousins.
If you wish to discuss any issues relating to retail insolvency or rescue procedures please contact Pamela Muir, partner, Morisons LLP.< Back