Facia falls into receivership

Retail chain collapses under pressure from creditor and auditors

Facia, the retail empire run by Stephen Hinchliffe, collapsed yesterday when accountants KPMG were appointed receivers.

The move followed emergency meetings between the auditors and the company's board last week and the lodging of a High Court petition by retail giant Sears to put Facia's shoe chains into administration.

Sources close to the company say the latest in a series of special board meetings with auditors Deloitte & Touche broke up on Friday with no resolution of concerns regarding its accounts.

These were understood to relate to questions about the way the Sock Shop to Saxone shoes group was being run and its sources of funding, following a detailed audit by the accountants.

Sources said its relationship with principal bank backer, Israel's United Mizrahi Bank (UMB) was a key area of concern. After an internal investigation, UMB's London branch recently sacked a manager, John Doherty, after concerns over improperly secured lending.

The probe centred on other loans, but industry sources confirm Mr Doherty was one of Facia's account managers. UMB declined to elaborate last week. "We don't make any comment on customer relationships because of confidentiality. We don't comment on any of our current or former staff either," said Christine Stradling, head of personnel.

Mr Hinchliffe and fellow director Christopher Harrison are already facing disqualification by the Department of Trade and Industry after the collapse of another company, Boxgrey, in 1993. Facia was also facing fines unless it filed its accounts to January 1995 by 1 July.

Mr Hinchliffe built Facia up into the country's second largest private retailer after Littlewoods in a flurry of deals starting in 1994, with acquisition of the loss-making Salisbury's luggage chain, backed by Scottish fund manager Murray Johnstone.

Sock Shop, fashion chain Red or Dead, lingerie specialist Contessa and menswear group Oakland followed. The acquisition of Sears' struggling shoe shops, including Saxone and Freeman Hardy & Willis, increased the number of shops to 850.

On Friday, Sears lodged a petition in the High Court to put the shoe shops into administration after Facia failed to pay its rent. Sears says it is owed pounds 4m, plus stock, and will take a pounds 25m provision for disposal of the 380 shops. Under its deal with Mr Hinchliffe, it also paid some 1,400 staff but was reimbursed by Facia. However, sources say a cheque for staff wages also bounced earlier last week.

Facia was seeking pounds 20m-pounds 40m in further funding and last week confirmed it was in talks with the Nasdaq-quoted shell company Texas American Group over a possible takeover. The announcement hardly inspired creditors' confidence, according to industry sources.

TAG, which claims golf clubs and hotels in Europe among its assets, is run by Bill Grosvenor, a London-based former adviser to Polly Peck's Asil Nadir and an undischarged bankrupt and convicted fraudster.

TAG also said it was seeking revenue itself but would attempt to sell shares in the US to refinance Facia.

At the end of last week, a Facia spokesman was still maintaining that the firm was solvent saying that the company's debt at the end of April stood at under pounds 10m, against annualised sales of pounds 250m.

He also confirmed the funding came principally from UMB and other firms owned by Mr Hinchliffe outside Facia, including the lighter and pens supplier Calibri and the toilet-ries firm French & Scott, which Mr Hinchliffe bought in 1994.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there