James Moore: A blow to the CVA as Suits You goes down
Thursday 28 October 2010
Outlook So Suits You's operator, the Speciality Retail Group, is in administration. That this was pending has become one of the City's worst-kept secrets in recent days, so it's hardly a surprise. Now it will be up to restructuring specialist GA Europe to salvage something from the mess.
The brutal truth of the matter is that this is a business that was simply not up to scratch. In fact it has been on the critical list for several years and only narrowly avoided the chop in February, when KPMG was the supervisor of a company voluntary arrangement (CVA) that allowed the group to slash its rent bill for 18 months.
Landlords are increasingly chary of approving these, arguing that they're the ones who usually get the thin end of the wedge.
The SRG example will add fuel to that particular fire, reflecting poorly on all concerned, given that the company is back on the scrapheap less than a year later.
The retail sector, eh. It really is the poster child for all the many flaws in the way Britain deals with failing companies. There's the fuss about CVAs, pre-pack administrations (which have often allowed the people responsible for mucking a business up to emerge with a debt-free operation not long after going down) and all the rest.
With a consumer slowdown around the corner, driven by VAT rises and benefit cuts, SRG will doubtless be joined by many others when things get tight in the New Year, although given this debacle they'll have a job to deal with their difficulties via the CVA get-out-of-jail (almost) free route.
If you want a demonstration of why we need to take a careful look at the way corporate insolvencies are handled, it's here. But even the pain of thousands of redundancies probably won't prod the politicians into acting. It's not as if accountants (who get listened to because they fund drinks dos in Westminster) are complaining. They stand to pocket a fortune in fees so what do they care?
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