Unsecured creditors owed up to £1.6m from collapsed footwear retailer Shoon are not expected to recover any of their losses, an administrators’ report has revealed.
The retailer appointed Neil Bennett and Alex Cadwallader from Leonard Curtis as joint administrators on 24 November 2017. Of its 10 stores, four were sold through a pre-pack administration to The Shoot Shoe Company. The remaining six stores closed with the loss of 45 jobs.
The report shows that no assets were available to unsecured creditors, who faced a combined loss of £1.6m. This comprised £1.1m to trade and expense creditors, £209,012 to Revenue and Customs in VAT, £46,664 in PAYE and National Insurance contribution shortfalls.
The administrators report stated that the business had a total of £812,789 of assets available to preferential creditors. However, after being written down the “realisable value” of the assets was cut to £35,489.
Stock originally valued at £464,700 was estimated to have a realisable value of £25,000. Office furniture and equipment worth £24,400 was reduced to £500. The firm also had £4,500 cash in the bank and £989 cash in hand.
A total of £29,274 was available to pay wages and holiday pay. However, claims from employees totalled £56,362.
TNUI Asset Finance was listed as the company’s sole secured creditor, with a claim of £6.2m. The report noted that TNUI recovered £60,000 from the administrators, and the secured creditor “will receive a further fixed charge distribution from the administration, but will ultimately suffer a significant shortfall”.
An earlier administrators’ report in December 2017 stated that Shoon had suffered from a “dramatic fall in sales and uncertainty created [by] the Brexit vote”, resulting in “excessive” head office and infrastructure costs.
It also cited high street discounting as a key factor in the retailer’s decline, as “a number” of retail units became loss-making.
Shoon completed its second company voluntary arrangement (CVA) since 2015 earlier this year.
Charles Clinkard, UK distributor for footwear brand Gabor, said: “We pulled out of supplying [Shoon] more than two years ago as we were unable to gain credit insurance for them.
“The law needs changing. Unless you have knowledge of who you are trading with as a supplier, you will get hit.
“Good owner-operators are becoming fewer and fewer, and that is having an effect on the market which is already very challenging.
One supplier said: “We got all our stock out of the shops when we realised the business was insolvent. I have lost £100,000 in eight months.
“We have written to our MP to say there needs to be guidelines as to how frequently a CVA be done. Is it reasonable that someone puts a business into a CVA every six months and walks away from a new batch of suppliers each time?”
Drapers has contacted administrators for comment.