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Joy’s suppliers accept offer of 2p in the pound

Creditors to fashion and lifestyle chain Joy have accepted a proposed payment of 2p in the pound following its pre-pack administration.

Trade suppliers were owed £5.1m, according to a report filed by administrators from KRE Corporate Recovery at Companies House.

Among them, Danish clothing supplier DK Company was owed £87,162; Volume Clothing was owed £77,158; Whispering Smith was owed £34,204; and footwear brand Butterfly Twists was owed £31,642.

Unsecured creditor claims from employees amounted to £36,375. The deadline for creditors to vote on proposals was midnight on 21 July.

The report revealed that Joy was sold back to its owners for £1.1m on 15 May, the same day that KRE was appointed as administrator. The sale was backdated to 12 May.

A company voluntary arrangement (CVA) proposal to the group’s creditors was explored before the sale, but ruled out after management determined the business “would not be able to generate sufficient profits” to provide an “acceptable” return to creditors.

It was also unable to agree terms with any corporate financing companies and asset-based lenders to secure funding for the group.

The report summarised trading performance in recent years. The management accounts for the seven months to February 2017 showed that Joy made a net loss after tax of £140,000 on turnover of £9.6m.

The retailer’s accounts for the year to 31 July 2016 showed turnover of £16m and £10.6m of overheads, resulting in a net loss after tax of £1.4m.

The group employed a financial controller in January 2017 to review its financial accounts. The findings showed that wholesale sales declined to £2m in 2016, down on £3m in 2015, and surplus stock had to be heavily discounted.

Meanwhile, return rates had increased to around 30% to 40% compared with 20% the year before, and “a number” of store openings during the year were “not financially successful”.

As previously revealed by Drapers, the troubled fashion and lifestyle business was sold back to owners Louche London and the Joy Group of Companies in a pre-pack in May following its collapse.

Joy closed 11 of 32 stores across the UK, resulting in 78 job losses. The company is now staffed by 230 employees.

 

Readers' comments (4)

  • How can this be legal?

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  • 2nd time in just a few years. Was the last time 2010? Suppliers lost a ton of £ back then too.
    It's shocking that this behaviour is legal (over all industries) but some know how to game the system to their advantage. I'm sure the pair of them ( owners) sleep very well at night luxuriating in their 'free' life funded by the toil of others.

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  • I am staggered why suppliers stand for supplying cowboy businesses such as Joy because they must know they are going to get turned over. You would think they know better. Obviously not.

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  • No joy here then.

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