Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We use cookies to personalise your experience; learn more in our Privacy and Cookie Policy. You can opt out of some cookies by adjusting your browser settings; see the cookie policy for details. By using this site, you agree to our use of cookies.

Blue Inc forked out £1.2m in pre-pack deal

Blue Inc bought its trading subsidiary A Levy & Son out of administration in January for £1.2m, it has emerged.

Blue Inc Portadown

A Levy had a book value of £38m on October 31 2015. The valuation on that date included leases for an undisclosed number of Blue Inc’s 236 UK and European stores, according to a report by administrators from Leonard Curtis.

Blue Inc subsequently disposed of 76 leases when A Levy was put into administration on January 19, resulting in the loss of an estimated 580 jobs. That same day, it bought the company back, saving 1,500 jobs across 160 stores.

The book value of the stock held by A Levy in October was £16m, the report shows. Blue Inc paid £800,000 for its stock on January 19.

The rest of the £1.2m comprised of goodwill of £200,000, £150,000 for store fixtures and fittings and £50,000 for vehicles and head office assets.

Blue Inc has been granted a licence to occupy its 157 remaining UK stores for a 12-month period from January 19.

A source close to the situation indicated A Levy’s suppliers are likely to receive between 50p and 80p in the pound, although negotiations are ongoing.

This is a higher dividend than is typically paid to unsecured creditors following an administration. For example, after Sports Direct’s young fashion chain USC went into administration in January 2015, unsecured creditors received around 3p in the pound.

In the 10 months to October 31, A Levy incurred a loss of £8.8m on a turnover of £81.9m. The report said A Levy had been subject to “increasing creditor pressure” from landlords and Revenue and Customs before the administration.

The company was unable to meet its monthly PAYE fee of £316,000 on December 22. Revenue and Customs issued a “pre-action letter” on December 23.

The report also reveals 30 industry parties initially expressed interest in buying A Levy and 11 returned non-disclosure agreements, indicating they were serious buyers.

The administrators concluded that a pre-pack deal with Blue Inc was the “most appropriate option” for creditors as it would achieve the best possible value for the business and assets.

They said a sale of assets after a period of trading in administration was not a viable option for a variety of reasons including the lack of funding available, the fact the Blue Inc trading name was not owned by A Levy, and because there were diminishing stock levels in stores as a result of “aggressive trading” and a “reduction of margin to generate sales income” in December and January.



Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.