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Jobs undervalued in Principles decision

Business may be booming for receivers, but it’s not all plain sailing. Increasingly they will find themselves having to make some very difficult decisions, and questions will be raised over whether they have made the right one.

The recent sale by administrator Deloitte of much of Principles’ stock to Debenhams has provoked fierce debate. Why Debenhams wanted the stock was clear; the brand generates sales of £60 million for the department store each year and to lose it would leave a very big hole.

However, with the retailer’s former co-owner Peter Davies busily scrambling to get enough cash together to buy the whole business, questions are bound to be asked about why the Debenhams deal went ahead until that alternative option had been fully explored. After all, it could have saved up to 2,500 jobs.

Administrators are duty bound to act in the interests of the creditors and realise as much value as possible through any sale of businesses or assets. In this case it may have been that they believed a quick sale of stock to Debenhams was better than holding off for someone who may or may not have come up with the goods.

Even so, I can’t stop thinking about all those people who now find themselves out of a job. It is times like this when government intervention in industry could be desirable. In terms of the best interests of Principles’ creditors, we have to believe Deloitte made the best decision they could, but in terms of the best interests of the industry, the government may well have decided that safeguarding jobs was of greater priority.

This story is not over. The brand is thought to be still up for grabs, so there may yet be some positive news.

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