Debenhams has emerged as the clear frontrunner to buy footwear chain Faith after the business collapsed into administration as a result of being over-leveraged.
The department store chain is thought to be keen to buy the rights to the Faith name and operate it as an own label, similar to the deal it completed with insolvent womenswear retailer Principles last year.
Debenhams, which has 120 Faith concessions in its stores that are thought to generate sales of about £24m, has a change of ownership clause in its agreement with the footwear chain, giving it a significant say in the future of the business. This means that it could terminate Faith’s concession agreement, thought to be the footwear chain’s most profitable operation, if the business was bought by a third party. Market sources said that without the Debenhams concessions the business was a far less attractive proposition.
However, in spite of the Debenhams conundrum, Faith has generated significant interest from outside buyers. Its £14m debt is understood to have been bought by restructuring specialist Hilco last week, just before Mazars was appointed as Faith’s administrators. There are thought to be more than 10 interested parties, including Faith supplier Logo 69 and John Kinnaird, its previous owner.
The deadline for bids is May 7.
Faith, which has 78 stores and employs 1,800 people, was put up for sale last month but failed to find a buyer, and the business collapsed into administration last week.
Mazars is believed to have set aside stock that is owned by Faith’s suppliers under retention of title rights.
A Mazars spokeswoman told Drapers that it was still in the process of “reconciling exactly what took place prior to the onset of the administration”.
Debenhams was unavailable for comment.
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Readers' comments (6)
Anonymous30 April 2010 0:33 am
All these jobs look like being lost, just like the 14 million pounds, where has the money gone? The company has been trading well, perhaps the authorities should investigate where it went, monkey business if ever I saw it.
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Anonymous30 April 2010 8:57 am
Debenhams is playing dirty games me thinks....
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Anonymous30 April 2010 8:59 am
Ask JK how many Bentleys he's got on that heated driveway in Lanarkshire
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Anonymous30 April 2010 5:40 pm
Why is noone asking Mazars why they will not sell to JD as reported in the Independant?
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Anonymous4 May 2010 4:50 pm
It doesn't make sense to me that the administrators aren't interetested in selling the business to JD Sports, who I believe will run the business in the current format and save 1700 jobs both in stores and at Head Office. They seem set on selling to Debenhams and have been from day one... It seems the deal was done before the administrators even arrived!!!!
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Anonymous14 May 2010 9:35 pm
FAO Drapers, what's happened to freedom of speech? Why have you removed comments and the ability to comment from other Faith articles? Just because the truth is coming out?
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