The famous and respected Beales department store chain has entered into administration, an insolvency procedure provided under the Insolvency Act.
It is always depressing when any company fails and is forced to enter into administration, let alone a prestigious business such as Beales with its 139-year-old history. The ripples of such an insolvency not only impact upon its 1300 employees, but it is also painfully felt amongst its suppliers, landlords and of course the greater community.
The high street is under intense pressure as never before; simply look at the demise of BHS and the financial issues faced by Debenhams, for example. The effect of competition from sophisticated internet suppliers together with increasing rental and pension commitments upon high-street names are immense, and often they prove too much for the latter to overcome and survive even through the “softer” corporate insolvency procedures such as company voluntary arrangements.
Clearly, we need to embrace a new order in the retail industry. Indeed, the Government has acknowledged this new order with a strategy to attempt to protect retail in town and city centres.
However, the administration procedure is far from a “horseman of the apocalypse”; it has been developed to rescue what can be saved from a failing business.
The administration procedure can protect the company or its business whilst it restructures to face its new challenges. The company itself may fail and eventually enter into liquidation but that core business of the company can be sold on to save jobs, save suppliers and save landlords so that the consequences of the insolvency are greatly lessened. Safeguards have been put in place by the insolvency regime to protect, as far as possible, the position of creditors.
Administration may be a procedure acknowledging the financial failure of the company (i.e. its insolvency) but it provides an effective means of helping protect those affected by that failure and hopefully ensure the survival of the business.
In an uncertain world, the administration procedure seeks to save as much as can be saved of the business and seeks also to protect (as far as it can) everyone and everything affected by the financial failure.
If you have any questions about administration process or would like to discuss any of the issues outlined in this Keynote, please contact Tony Sampson using the contact details below.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.