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In Depth: Peacocks Creditors' Report 15 March 2012

Senior secured and unsecured lenders to Peacocks Group are “unlikely” to see all their money again, according to the official creditors’ report from KPMG.

In the official creditors’ report from joint administrators Richard Fleming, Chris Laverty, Ed Boyle and Joff Pope, it stated that KPMG is continuing to recover value where possible and the assignment of leases of closed stores is continuing.

Chris Laverty, restructuring partner at KPMG, said Peacocks, as the largest retail failure of 2011 required the mobilisation of a significant team of over 50 KPMG staff, made up of a diverse range of professionals from employee specialists to tax experts.

She explained: “The team worked with hundreds of stakeholders to stabilise the business while we sought a buyer on a going concern basis; not least working with 9,600 staff, negotiating with over 150 suppliers, managing 611 stores and 49 concession sites plus interacting with 15 international franchise partners.

“Apart from head office redundancies, all staff were kept in their posts until the sale of the majority of the business four weeks after our appointment to Edinburgh Woollen Mill.”

Laverty conceded that while employees will be paid in full, the severity of the company’s debts mean that “senior secured lenders are unlikely to make a full recovery and there will be a very small return to unsecured creditors”.

Mark Bayley, restructuring real estate director at KPMG, dealt with the property portfolio of the retail group.

He said: “Of the 224 stores that did not transfer as part of the sale of business, we have negotiated deals on 30 properties between 4,000 and 20,000 sq ft in size so far.

“We have exchanged contracts with three retailers – Poundland, Poundworld and Iceland – to date with many more expressing serious interest. We are actively marketing the remaining 124 stores, which continue to attract a high level of interest from a variety of goods and food operators.”

KPMG has confirmed it is still in discussions with Edinburgh Woollen Mill regarding 17 former Peacocks stores. The administrators have surrendered the leases on a further 53 closed stores to landlords.

Peacocks: The main points:

- Total group debt was over £700m, including c£133m from a syndicate of senior lenders plus over £500 million of mezzanine and junior facilities from other lenders.

- The administrators’ time costs to date total £5.4m and they will seek the approval of the creditors for their fees.

- On 20 January 2012 Bonmarché was sold via ‘pre-pack’ administration to Sun European Partners.

- On 22 February 2012 the majority of the Peacocks business was sold to Edinburgh Woollen Mill.

- Employees rank as preferential creditors and will be paid in full.

- It is currently estimated that the senior secured lenders (owed c.£133m) will not make a full recovery on their debt.

- Due to the level of the senior secured lenders’ indebtedness there will only be a very small payment to unsecured creditors of the main trading company: an unsecured claim of £100 is estimated to receive a distribution from the prescribed part of only 68 pence.

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