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SECTOR REPORT - RETAIL

Provided by Insolvency News


UK retailers have dominated the headlines over the past 12 months, with mainstream brands such as TJ Hughes, Oddbins, HMV and Alexon all triggering widespread speculation about the sector.

In spite of the many retail cases this year, figures suggest 2012 will be a far busier time, with experts suggesting there are a whole host of businesses already ‘technically insolvent’, but being allowed to trade to make the most of the Christmas period.

A host of consultancy firms have already been advising retailers on how they can improve their business models and refinance, but many of these will likely enter administration after the festive trading period.

Among those firms that have been busy with consultancy work is Begbies Traynor, which has been dealing with retailers – small and large – worried about the New Year prospects for the businesses.

Julie Palmer, partner at the group, says directors must ascertain whether they have the banks’ support to trade out of the current difficulties after the Christmas period.

She explains: “Christmas trading is absolutely crucial and the quarter rent period hits at the end of the December.

“We look at whether the business is viable or whether Christmas will just be a short term solution. During that period, businesses should be managing their credit and negotiating the best deals they can with suppliers.”

Palmer believes that a high number of businesses will formally announce their descent into administration on Christmas Eve, Christmas Day or Boxing Day as the next rent payment becomes due.

She added: “You will see a number of retailers where they will file an intention to appoint administrators before to give them a 10-day grace period into the New Year to negotiate terms.”

UK retailers have dominated the headlines over the past 12 months, with mainstream brands such as TJ Hughes, Oddbins, HMV and Alexon all triggering widespread speculation about the sector.

In spite of the many retail cases this year, figures suggest 2012 will be a far busier time, with experts suggesting there are a whole host of businesses already ‘technically insolvent’, but being allowed to trade to make the most of the Christmas period.

A host of consultancy firms have already been advising retailers on how they can improve their business models and refinance, but many of these will likely enter administration after the festive trading period.

Among those firms that have been busy with consultancy work is Begbies Traynor, which has been dealing with retailers – small and large – worried about the New Year prospects for the businesses.

Julie Palmer, partner at the group, says directors must ascertain whether they have the banks’ support to trade out of the current difficulties after the Christmas period.

She explains: “Christmas trading is absolutely crucial and the quarter rent period hits at the end of the December.

“We look at whether the business is viable or whether Christmas will just be a short term solution. During that period, businesses should be managing their credit and negotiating the best deals they can with suppliers.”

Palmer believes that a high number of businesses will formally announce their descent into administration on Christmas Eve, Christmas Day or Boxing Day as the next rent payment becomes due.

She added: “You will see a number of retailers where they will file an intention to appoint administrators before to give them a 10-day grace period into the New Year to negotiate terms.”

 

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