The latest letters from Drapers’ readers
Croydon points to a fashion exit
The situation you mentioned in your article about Croydon council not helping not-for-profit business Fashion Enter (Drapers, March 28) flies in the face of the recent debate about landlords being more flexible with small retailers to minimise empty units in the UK.
Fashion Enter has helped hundreds of young designers by promoting their ranges in its shops in London, but will it be able to continue to do so in Croydon?
The Fashion Enter model is the only opportunity for designers to retail their collections direct to the public and receive the lion’s share of the sales turnover.
Other local authorities have granted rate relief to Fashion Enter as a “not-for-profit and community” organisation, so why has Croydon council chosen not to?
Last month the government asked all councils in the UK to come up with schemes to fill all the empty shop sites in their boroughs with art installations and other attractive temporary options to prevent high streets and shopping centres looking like ghost towns.
It is interesting to see that Croydon council’s inflexibility could lead to the closure of Fashion Enter’s fairly large unit in the town.
- Michael Goodmaker, owner, Designerhelp.co.uk, Harrow, Middlesex
Free seminar will help you get paid
On May 12 Fox Williams will hold a free seminar aimed at companies which either have distributors or act as distributors. Our Agentlaw team (which specialises in advising principals, suppliers, agents and distributors) has seen a growing number of fashion companies fail to obtain payment for goods supplied. Often this is because of inadequate terms and conditions of sale or failure to follow the best payment method.
As a result, two members of our Agentlaw team, Sophie Albinson and Rachel Cook, will be talking on the above issues. Ian Cole, head of business development, London, from The Royal Bank of Scotland, and Stephen Baird, a leading US lawyer on intellectual property at Winthrop & Weinstine, will also address issues at the event.
The seminar starts at 6pm at 10 Dominion Street, London. To attend, email email@example.com.
- Stephen Sidkin, partner, Fox Williams, London
The 60-second debate: Will CVAs become more popular than pre-packs?
Until the success of the Sixty UK Company Voluntary Arrangement (CVA), stakeholders have perhaps looked upon them with doubt.
A CVA in a larger-scale business is more involved than a pre-pack administration. It requires extensive negotiation, financial planning and modelling to ensure buy-in from all stakeholders can be achieved.
Because a CVA is an agreement with creditors and shareholders, a successful one would provide the best outcome for all.
Pre-packs are used to transfer ownership of the business to a new company. If you can recover more assets and save more jobs in a salvage situation by pre-pack, then this is still appropriate.
- Nick O’Reilly, client partner at Vantis Business Recovery Services
CVAs offer a greater level of involvement for landlords via things like credit risk committees, and that is a good thing. JJB Sports’ approach has been very positive and solid. Stylo’s CVA proposals [which failed] were a bit more challenging. It’s down to the approach of the CVA.
But it’s not the end of pre-packs. Each individual business has to work out what the best approach is. Everyone appreciates that a retailer may take on a store that doesn’t work but a pre-pack will still be the solution if a business has a real problem. However, the bottom line is that a business should tell us early before it gets to a pre-pack situation.
- Ronan Faherty, commercial director at retail landlord Land Securities
A CVA binds more of the stakeholders to an agreement. In a pre-pack, unsecured creditors would be left behind.
Pre-packs are seen as a way of dealing with a struggling business. But they are not always the most appropriate solution and have got
a bad reputation for being delivered without a full marketing process to third-party buyers.
They were designed to deliver an insolvency solution for firms whose problems were too complex for them to keep trading but their use has gone beyond that. Lenders like them because they are quick, and landlords can often negotiate better terms on stores that are retained.
We may see more CVAs but it depends on the company.
- Daniel Butters, partner at financial services company Deloitte
If a retailer demonstrates that it has genuine hardship, we will work with them. Sharing of information is key to a CVA, and a proposer must fully disclose the future business model.
The CVA should always be a temporary solution, allowing the retailer to return to normal trading conditions. Where the new business model is set on strong foundations, the CVA should not be viewed as an opportunity to hand back the keys of underperforming stores and renegotiate leases.
A major advantage of a CVA over a pre-pack is that the retailer can avoid the stigma of insolvency and maintain their supplier
- David Atkins, UK managing director at real estate firm Hammerson