Background
Arch Angels Ltd is a beauty bar business with concessions in 33 locations within Debenhams department stores and approximately 120 employees. The company operated under a concessions agreement and were not aware of Debenhams powers under that agreement. They were also using an ID (Invoice Discounter) financed at 80% and owing £140,000.
Issue
Problems arose when staff wages could not be paid.
Prior to our appointment with the company, a previous IP had not informed the ID of the financial issues (despite acting for over two months), until they received an unexpected call asking them to fund £85,000 of wages and warning the business having no other option but to be put into Liquidation. We were appointed three days later as Joint Administrators.
Outcome
As soon as we took the position we contacted all staff that same day to inform them of what was happening.
Cessation of trade was made as wages could not be paid and all staff were made redundant. We employed agents to assist all staff in making relevant claims.
Debenhams had a potential damages claim which greatly exceeded the debt due to the ID provider. It was estimated a 100% write off.
We made early engagement with Debenhams as how best to deal with the business in each location (with both party’s interests taken into consideration). As a result, two, third-party buyers have now taken on 28 of the 33 locations and employed over half of the staff who were previously made redundant. 120 employees have received arrears of their wages and other entitlements.
We were also able to ensure damages claim were mitigated with payments of £50,000 already made to the ID provider and further funds to follow.
