BEGBIES TRAYNOR ADMINISTRATORS have arranged a pre-pack administration of retailer United Carpets.
Lila Thomas and David Acland, partners at Begbies Traynor, were appointed joint administrators of the business.
The parent company United Carpets Group acquired the business and assets of its trading subsidiary United Carpets (Northern) Limited.
The flooring and bed retailer employs about 400 staff in its 72 stores, which were all included in the deal as well as two warehouses.
However, one store closed the day before the administration took place, with a spokesman claiming it was “independent” of the process.
Thomas (pictured) said: “The administration was a consequence of the challenging economic climate, but also the long-term lease commitments to the landlords of the stores.
“Attempts were made by the company to renegotiate lease terms. However, these proved unsuccessful. The administration of the company became inevitable. The subsequent sale was a positive result and has safeguarded the jobs of those working for the company.”
Insolvency experts have blamed quarter day payments – the date every three months on which rent is paid – on the sudden influx of retail administrations such as JJB Sports and Optical Express.
Rent is paid after after the cost of the administration and secured creditors such as banks. This structure has led to an influx of administrations after the quarter day so the premises can be used for the remainder of the quarter without having to pay any rent until the next due date.
“Recent court decisions have made an administration appointment immediately post-quarter day much more attractive to tenants – in so doing, some tenants may be able to avoid anything up to a full quarter’s rent, significantly enhancing the prospect of a business sale and returns to creditors in the insolvency,” said Alastair Lomax, legal director in the restrucutring team of Pinsent Masons.
“This has been yet another bad quarter day for landlords. They are in an invidious position: reach a compromise which could imperil their own finances or accept the risk that the continued squeeze on tenant businesses could result in another vacant shop.
“Many of these leases were negotiated under sale and leaseback deals done at the top of the market, often with upwards-only rent reviews – linked to inflation, not turnover. As a result, many retail tenants now lack the means to meet their immediate liabilities, let alone reduce their long-term exposure.”
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