Written ByRobert Moore
Marketing Manager
Rob has over a decade of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.
Rob is now working with the Board at KSA Group Ltd to develop strategic marketing programmes to support the business plan and drive more company rescues.
Update: 11 June 2024
99% of Superdry creditors have voted in favour of the proposed restructuring plans to rescue the fashion retailer.
The proposed plan includes a delisting from the stock market, achieving rent reductions at 39 of its 94 UK stores and an equity raise underwritten by founder, Julian Dunkerton.
This is a restructuring plan under part 26 of the Companies Act
Update: 15 April 2024
It hits the news today that landlords of Superdry are considering a restructuring deal that would result in steep rent cuts at a large proportion of its 94 British shops. The scale of the rent cuts would be dependent on the financial performance of each site.
According to City sources, the fashion retailer is not planning on any permanent closures, but landlords would have the option to terminate any leases if they were not satisfied with the terms of the deal.
Superdry has been facing red for some time. Most recently there were talks with founder, Julian Dunkerton regarding a takeover, but such talks were then aborted.
Sky News share more.
Update : 29 January 2024
In line with other retailers Superdry has been finding trading difficult due to the cost of living crisis. It has also been cutting back its store count. The clothing brand has 104 stores in the UK and started closing some back in July 2023. The company also announced that it was looking at costs savings of some £40m. This is an increase from the £35m they announced recently. There are now rumours circulating that the company is looking at a Company Voluntary Arrangement (CVA) as a way of cutting costs.
The CVA is a powerful rescue tool that is particularly favoured by retailers due to is ability to allow companies to vacate properties and determine their lease obligations. The cost of high rent shops on long leases can be a heavy burden on retailers.
The following case law has been used for some years now to terminate leases with no cash cost to the company.
Re: Doorbar v Alltime Securities Ltd (1995) BCC 1149 stated that landlords can be bound by voluntary arrangements for future obligations under a lease.
Re: Cancol Ltd (1995) BCC 1133 that the word ‘creditor’ in r1.17(1) IR 86 was wide enough to include a landlord with a right to future rent i.e. the ability to include future rent extends to CVAs as well as Individual Voluntary Arrangements.
Furthermore, where the unliquidated or unascertained claim in a CVA involves future rents accruing to a landlord, the case of Re Park Air Services [1996] BCC 556) gives the CVA meeting chairman some considerable guidance as to quantifying the claim at the meeting.
Another reason that Superdry is finding itself in difficulty is that it rapidly expanded to try and become a global super brand. No doubt much of this expanision was fueled by cheap debt and as many companies are now finding out when interest rates rise and customers pull back the going gets very tough. As such the shares have lost almost 90% of their value in the last 12 months
Sky News has reported that PWC are the advisors that are looking at restructuring options.
It is quite standard practice to put out stories about a possible CVA as this does prepare the ground for negotiations with landlords. They will be asking the landlords for substantial rent reductions in order for them to survive. If landlords refuse then they can usually get other suppliers and trade creditors to support a CVA proposal and out vote them.
Landlords have tried to challenge CVAs in the courts on the grounds that they unfairly prejudice their position but have so far failed to succeed.