Facia crisis deepens as Sears serves petition
Saturday 01 June 1996
Sears said it had decided to take the action after it concluded that Facia, which also includes Salisbury's, Sock Shop and Oakland Menswear, could not adequately refinance and discharge its outstanding debts to the company. The move follows Sears' sale to Facia of a string of high street footwear companies including Freeman Hardy Willis, Saxone, Manfield, Trueform and Curtess.
The move is a potentially devastating blow to Mr Hinchliffe, the colourful Sheffield entrepreneur who has rapidly built Facia up to an 850-store group.
The administration petition will be heard in the High Court next week and involves three companies. They are Wisebird, one of Facia's subsidiary companies which includes the Saxone and Curtess businesses; Facia Footwear, which includes Freeman Hardy Willis, Manfield and Trueform; and Cityscan, the property company which holds the store leases. Facia declined to comment yesterday.
Mr Hinchliffe is already facing action from the DTI that could lead to his disqualification as a director. He and his fellow-directors will face a DTI fine if they do not file Facia's accounts by 1 July. Mr Hinchliffe is also in the midst of negotiations which could see him sell Facia to a US group Texas American Group.
Sears said it had been monitoring closely its exposure to and its relationship with Facia. It added that recent information received from the company following the announcement of the DTI's investigation had been insufficient to satisfy it that Facia could fulfil its obligations
Also yesterday, Sears said that it would no longer be selling Saxone Limited to Facia as originally agreed in February and would be taking an additional pounds 25m exceptional charge to cover the cost of disposing of the unwanted properties and to cover debts owed to it by Facia.
This action has been necessary as the shoe deals struck with Mr Hinchliffe were split into two parts. The first involved the sale of the assets and trading names of the companies. The second stage would see the expensive leases of the stores revert from Sears to Facia and had not yet been completed. Those leases revert to Sears.
The collapse of the second part of the deal is certain to anger the City and place additional pressure on Liam Strong, Sears' chief executive. His position has come under threat as the company has continued to underperform.
Sears had said it would complete the deal by the time of its interim results in July.
The consequences for Mr Hinchliffe could be even worse as his personal and corporate problems continue to mount. In addition to the DTI investigation, which also includes the Facia finance director Christopher Harrision and the late filing of accounts, he is also seeking fresh funds.
The deal with Texas American Group, a small US quoted company originally looked certain though Facia said that it was in talks with other parties.
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