Footwear chains Barratts and Priceless have appointed Deloitte as administrators.
Deloitte said it was seeking agreement from creditors to Barratts and Priceless to place the companies into a Company Voluntary Arrangement, which would enable the stores to continue to trade long term.
The CVA includes a proposal to repay creditors in full and to renegotiate with landlords. Footwear suppliers are owed around £10 million by the businesses. Deloitte said if creditors approved the CVA proposal, suppliers would be paid in full over a 14 month period beginning in June 2009.
Under the proposals, landlords will be paid 3% of shop turnover for three months beginning in June 2009. This will rise to 7% of turnover for the remaining 11 months.
The proposals are due to be sent to creditors today.
The Ziff family, who founded the business and who are the majority shareholders in the firm, said they were willing to make substantional funds available to the business if the board requested them.
Daniel Butters, Deloitte partner and join administrator, said: “Stylo has faced a downturn in trading as a result of the current difficult economic and market conditions. We have been appointed as administrators to Barratts and Priceless while we contact all creditors with a proposal to rescue the company via a series of CVAs. Under the CVAs, we will be asking creditors and landlords to contractually vary their terms of trade in order to give Barratts and Priceless the necessary breathing space to allow them to deliver value for all stakeholders in the future. We are seeking to enable the rescue of Barratts and Priceless, while giving creditors and landlords a chance to vote on the future of the companies.”
“If creditors accept the proposals, the administration would cease, after a 28 cooling off period, and the companies would continue to trade under the CVAs, which would remain in place for two years. The administrators would become supervisors to ensure that the companies meet their obligations to creditors.”
Barratts and Priceless operate 400 high street stores and employ 5,450 staff. The stores continue to trade and are part of the Stylo group. Stylo is not in administration.
The company recorded losses of £9.3 million for the six months to August 2.
See the attached Pdf for a full breakdown of the CVA proposals.