Administrators shop for work in retail after tough

Several retail insolvencies hit the headlines over the Christmas and New Year period, with many finding trading conditions just too tough and bringing in the administrators.

On the high street, clothing retailer Kookai was the latest casualty, with holding company Adjustbetter bringing in administrator Deloitte, which is being advised by Ashurst head of insolvency Nick Angel.

When a company files for administration its affairs are run by the administrators (typically partners in accountancy firms), who will determine the way forward for the company.

Elsewhere, Eversheds‘ Birmingham office scooped a high-profile case for its insolvency team when snack maker Golden Wonder threw in the towel and brought in administrator Kroll. Eversheds insolvency partner Louise Pheasant is leading the team advising Kroll alongside Denton Wilde Sapte (DWS).

Simon Neilson-Clark’s insolvency team at DLA Piper Rudnick Gray Cary has been instructed on a trio of insolvency mandates, starting with off-licence chain Unwins, which brought in KPMG as administrator just before Christmas. The firm is also acting for Kroll as it manages the fallout from music retailer MVC. Finally, Neilson- Clark’s team landed a PricewaterhouseCoopers instruction when AIM-listed Canterbury Foods, which supplies school meal ingredients, announced that it, too, had collapsed.

Neil Griffiths, insolvency partner at DWS and the lawyer advising Kroll on the Golden Wonder administration, says: “Christmas has always been a busy time for insolvency practitioners. Companies often bring in the administrators to get creditors off their backs for Christmas. They hope that blue skies will appear in the new year.”

Tough trading conditions in the retail sector also have to be taken into account. Most observers expect more scalps before the month is through.

However, for Clifford Chance insolvency partner Adrian Cohen, these cases fail to point to any major trauma in one sector of the market. “The insolvency market is still relatively quiet and we haven’t got any big industry sectors which are suffering wholesale problems,” he says. Cohen points to the last few years, which have seen full-scale troubles in the energy and telecommunications industries, to name just two.

Insolvency practitioners have diverging opinions on the cause of the current outbreak, but with tough trading conditions here to stay, retail administrations look set to keep hitting the headlines.