Business recovery project of the year: KPMG

High street brand JJB was facing the possibility of going under when the KPMG team came along.

A CVA, a delicate balancing act at the best of times, was complicated by the scale of JJB’s operations. JJB’s closed stores’ rent roll came to £17.3 million, with 140 dark stores bleeding money from the organisation.

When KPMG arrived, the company had cash requirement issues, unprofitable divisions, unprofitable stores and lacked a long-term strategy. KPMG developed a three-pronged approach to the problem.

First, it provided assistance on forecasting and generating working capital, enabling JJB to remain within its bank facilities and providing comfort to its lenders.

Second, KPMG’s debt advisory practice assisted JJB’s management in modelling a long-term sustainable debt position, negotiated stand still agreements with the lender group and obtained new funding facilities.

The final prong was to dispose of the unprofitable arms of the company, through either sale or administration.

In awarding the KPMG team the Accountancy Age Business Recovery Project of the Year, judges noted the complexity of the task.

“JJB was a complex project and the adviser had its work cut out,” the judges said.“ A sustainable future had to be developed for the business and KPMG demonstrated great innovation with its CVA process. It was terrific result all round.”

The CVA was overwhelmingly welcomed by landlords. KPMG demonstrated that working with landlords to resolve issues is a viable and realistic possibility.

KPMG said there was complete transparency in communication between management, advisers, stakeholders, shareholders and suppliers.

Following its work with JJB, KPMG went on to advise in the CVA for Signlease – the main trading subsidiary of Discover Leisure.

SPORTING GIANT

In 1998 JJB was the largest retailer of its kind in the UK. When KPMG arrived on the scene the company still had 250 open stores and 55 fitness clubs. The business was formed in 1971 when it acquired a sports store first opened in 1900. By 1994 it had 120 stores, when the company was floated.