Suits You collapses putting 350 retail jobs on the line
Thursday 28 October 2010
Speciality retail Group, the company behind the Suits You menswear chain, has collapsed into administration just eight months after a controversial insolvency procedure, leaving 350 jobs hanging in the balance.
GA Europe, the restructuring specialist, acquired SRG yesterday for an undisclosed sum and then put it into administration by appointing Zolfo Cooper, the recovery services firm.
Suits You – which has 65 stores some of which house Young's Hire – appeared to have been saved in February after creditors approved a company voluntary arrangement (CVA), an insolvency procedure that saw its rental bill slashed. SRG offered landlords of 42 loss-making stores 60 per cent of the full-rent for a period of 18 months after which they would close.
But dire recent trading sealed the retail group's fate. Zolfo Cooper said that Suits You had suffered "severe cash flow difficulties".
The administration is a blow to the high street ahead of the crucial Christmas trading period, with industry experts expecting more retailers to fold in the months ahead.
Furthermore, the failure of Suits You just eight months after it completed the CVA, which was supervised by the accountancy firm KPMG, raises questions about whether sickly retailers will be able to use this insolvency procedure to avoid collapse.
Some of the biggest retail landlords, such as Land Securities, have expressed serious concerns about CVAs.
Fraser Gray, a partner at Zolfo Cooper said: "Circumstances have been particularly tough for many businesses on the high street. It's important that we identify and focus on the more profitable parts of the business, while continuing to streamline the least effective." Zolfo Cooper will continue to trade "successful" Suits You shops, while pursuing, a "realisation strategy for part of the business and assets". However, it will "wind down" loss-making stores.
GA Europe, which is a subsidiary of the US restructuring giant Great American Group, said it will assist the administrators in evaluating SRG's trading and to operate the stores. Given the losses being incurred by the Suits You stores, a quick decision is required.
Back in February, Peter Lucas, the chairman of SRG, said: "We look forward to a new chapter in the business's development and we are confident that the CVA will give Suits You a new lease of life."
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