Major shortfall for creditors of collapsed retailer revealed
DETAILS have emerged of the financial fallout from retailer Austin Reed’s administration showing a raw deal for unsecured creditors.
Having been appointed as administrators of Austin Reed on 26 April, AlixPartners were unable to find buyers for certain assets of the business.
1,000 jobs were at risk, including at its operations headquarters in Thirsk. Companies House documents say that 443 staff have been made redundant thus far, with a few dozen transferring to different stores.
It said that all wages were paid up to the date of administration, with holiday pay and pension contributions being returned to staff.
Administrators took over the companies in the Austin Reed portfolio, which include the Austin Reed Group, Austin Reed Limited, Country Casuals, and ARG Property, amongst others.
Secured creditor and bankers Wells Fargo will receive a full return on their investment of the businesses, with £7.24m being returned to them.
Preferential creditors, which include the 1,155 employees of the group will receive £31,178, a full return.
However unsecured creditors of the Austin Reed Group, which are owed a total of £30.26m by Austin Reed Group, will only receive 2p of every £1 loaned to the business.
It still remained uncertain how much Alteri Investors would receive from the businesses, having been owed £18.24m.
AlixPartners said Alteri should expect a “significant shortfall” but the “exact quantum” cannot be confirmed. It has also predicted a trading surplus of £3.5m when available stock is sold. It said that it had secured £850,000 from an Alteri arm in Luxembourg to enable it to continue trading Austin Reed, which would be repaid.
AlixPartners said that 64 parties had come to them following the collapse, with 45 agreeing non-disclosure agreements.
Austin Reed was founded more than 100 years ago as a tailoring service, before expanding into its womenswear brands with Viyella and Country Casuals.
In January, creditors voluntary arrangements were organised after challenging trading conditions. A restructure led to the closure of 70 stores, before the retailer encountered significant cash flow issues by April, when it went into administration.
