600,000 pound left to share: Austin Reed ́s creditors to lose big

Those unsecured creditors of failed retailer Austin Reed bust get ready to face big losses, warn the apparel retailer administrators.

The collapse of the British retailer will inflict huge losses on the retailer’s unsecured creditors, who will be left to share just 600,000 pounds from the failed company, reports the ‘Guardian’, citing sources close to the matter.

After collapsing last April, Austin Reed appointed Alix Partners as its administrators.

Austin Reeds owes more than 30 million pounds to unsecured creditors

As gathered within documents filed by the administrators with the Companies House, Austin Reed owes its unsecured creditors 30.24 million pounds. However, just about two pence per each pound owed is expected to be recovered.

Thus, while Wells Fargo is expected to have its 7.24 million pounds of debts with Austin Reed fully repaid, Alteri Investors, which focuses on distressed retailers and took control of the business, is owed 18.24 million pounds and is said to be about to “suffer a shortfall”.

The company had to enter into a company voluntary agreement last year, resulting in 70 stores being closed, but sales continued to fall. Despite undertaking the closure of certain unprofitable stores, a number of loss-making stores remained," the administrators wrote.

Additionally, Austin Reed then faced "considerable creditor pressure" because suppliers were failing to get credit insurance due to being exposed to the group, as explained by the administrators earlier this month.

The failure of the 116-year-old retailer, which employed about 1,200 people, came just days after the collapse of BHS. Philip Day, the owner of Edinburgh Woollen Mill, subsequently acquired the Austin Reed and Country Casuals brands, as well as five concessions in Boundary Mills outlet villages, but the rest of the chain has been wound down.

So far 443 employees have been made redundant, and the rest will lose their jobs "as stores run out of stock" advanced Alix Partners a couple of months ago when the collapse of the retailer was made public.

The documents from the administrators reveal that store sales at Austin Reed suffered due to an increase in online sales, reports ‘City A.M.’ "

As highlighted by market analysts over the weekend, the retailer’s main worry in this regard is that landlord creditors were going to take action "which threatened the ability of the group to continue to trade unhindered".

Image:Austin Reed Official Facebook Page