Corporate recovery and business advisory firm Quantuma has been asked to step in as another UK High Street retail chain hits problems.
Genus UK Ltd, which trades as Select, has asked Quantuma to advise on a Company Voluntary Arrangement (CVA).
Select operates from 183 stores across the UK supported by centralised head office and warehouse facilities, plus online trading, and has around 2,000 employees. The company trades as a value ladies’ fashion retailer, targeting 18-35-year-olds with up to 4,000 fashion products.
Quantuma partners Andrew Andronikou, Andrew Hosking and Carl Jackson have assisted the board of directors to formulate proposals for a CVA, which were filed at the High Court of Justice on Monday 26 March.
A creditors’ meeting has been convened for Friday 13 April at which the company’s creditors will vote and determine the company’s future.
The proposal primarily seeks to obtain the approval from a number of the company’s landlords to accept a reduction in rent for some stores with an option to take back loss-making sites, which appears to reflect the current prevailing issues for businesses trading on the high streets.
The company is committed to preserving employment and, subject to acceptance of the proposal, will continue operating all of its UK sites. In doing so this should provide stability to landlords and staff with further costs savings to be achieved via economies of scale and a controlled review of operational costs and structures to be conducted outside of the CVA proposal.
Andrew Andronikou said: “The business has suffered as a result of the depressed retail market and escalating rent and rate charges. This inevitably has caused a squeeze on cash flow resulting in a cash burning for a number of years.
“The position for this business, and many businesses of the same model is no longer tenable and has escalated to the present situation where a CVA is considered to be the only option, other than closing it in its entirety”.
In the year to June 2016, Genus UK Ltd made a loss of £1.5 million on sales of £81 million.
Andrew Andronikou said: “The loss of anchor tenants on high streets and in smaller shopping centres has had a downward spiralling effect on stores such as Select, culminating in a reduction of footfall and therefore custom.
“We have carefully considered the formulation of the proposals to present a balanced outcome for both the company and its creditors. We are confident that given the current turmoil in this sector the creditors will support the directors’ proposals and prevent another brand disappearing from our high streets.”
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Notes to Editors
Quantuma LLP is a leading corporate recovery and business advisory practice delivering partner-led solutions to businesses and individuals facing financial distress with offices in London, Southampton, Marlow, Watford, Brighton, Bristol and Manchester.
Company Voluntary Arrangements
A CVA is a legally binding, formal process enabling a compromise to be entered into between a company and its creditors, based on a vote passed by a majority of creditors greater than 75%, by value, of those voting on the proposal.