Police briefed on Facia collapse
Sunday 09 June 1996
The move came as accountants KPMG prepare to sell Sock Shop early this week. KPMG also hope to sell at least one of four other chains - Contessa lingerie, Red or Dead fashion, Torq jewellery and Oakland menswear - as it starts to piece together Facia's tangled debt and accounting affairs.
KPMG partner Tony Thompson said meetings would be held with Facia auditors Deloitte & Touche. They would investigate whether there is any evidence of breaches of insolvent trading laws, which would be a criminal offence.
The group collapsed last weekend with total debts of pounds 30m, including pounds 7m to Israel's United Mizrahi Bank, which put the receivers in after court action by retail giant Sears.
KPMG found that Facia had no cash and no bank or credit lines on which to draw. "There were no facilities at all available to the group that were unutilised at the time," Mr Thompson said.
Just before the collapse Deloitte & Touche had sufficient concerns over the running and funding of the group to have considered contacting the police and the Department of Trade and Industry themselves. Mr Hinchliffe and Facia finance director Christopher Harrison already face disqualification as directors over the collapse of another company in 1993.
Deloitte & Touche have been unable to finalise Facia's late 1995 accounts because of the concerns. The auditors expressed similar reservations in heavily qualifying Sock Shop's 1995 accounts earlier this year, as did KPMG with Salisburys.
Talks will continue tomorrow with a whittled-down list, with Sock Shop and the other chains expected to achieve a quick sale. More than 8,000 jobs are at risk at the 850-store group, including the Freeman Hardy Willis, Saxone and Curtess shoe chains which Mr Hinchliffe owns personally.
Last week, accountant Grant Thornton kicked off the disposals with the sale of 39 Salisburys luggage shops. Price Waterhouse, put in as administrators to the shoe shops by Sears, said, however, it would take at least a month to call a creditors meeting to decide their future.
Sears is owed pounds 29m, including pounds 21m for stock, and its court action sparked the receivership after Facia failed to pay rent and a cheque for wages bounced.
The fiasco, which has cost Sears nearly pounds 80m, has prompted calls for the head of its chief executive, Liam Strong, although his chairman, Sir Bob Reid, rallied to his support last week.
First Financial, Facia's former PR advisers, said that Mr Hinchliffe had insisted early last week that he had "three facility letters on which he could draw" but which they had not seen.
Confusion also reigned over whether Mr Hinchliffe was involved in an attempt by Facia chief executive Gary O'Brien to buy the shops back.
Such a sale would anger creditors but appears unlikely: "He's got a problem with his financing," one source close to the talks said.
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