Clintons rescued from closure as it’s sold back to previous owners saving 2,500 jobs
GREETINGS card chain Clintons has been sold back to its existing owner in a rescue deal that safeguards 2,500 jobs.
The move will see the high street stalwart's 334 stores saved, and they will continue to trade as normal.
Clintons was founded in 1968 but it has struggled in recent years due in part to high business rates and a change in people's shopping habits with people moving online.
Speculation had been raised over the firm's future when it announced only last month that it urgently needed to close 66 of its sites to avoid collapse.
The chain also wanted landlords to slash rent prices on remaining shops, moving 206 shops to a model where rent payments were linked to the store's performance.
But neither of these things will now happen because the firm has resolved its woes by entering into what's known as a "pre-pack administration".
What happens when a business goes under?
HERE are the main options struggling businesses have, according to insolvency and restructuring trade body R3:
- Administration – This is designed to rescue a business or company. Here, administrators will run the company while looking for a buyer or new investment, or while restructuring takes place. The company may be rescued completely with new investment or a restructure, or parts of the business may be sold in full or in part to a new company and the insolvent company liquidated.
- Company Voluntary Arrangement (CVA) – This is where an insolvent company agrees to repay its creditors a proportion of its debts over a set period of time. In most cases trade will continue as normal.
- Creditors’ Voluntary Liquidation (CVL) – Here, companies are liquidated when there is no prospect of rescue. The company’s assets are sold to raise money to repay creditors.
- Compulsory Liquidation – This is where the company is forced to wind down by the courts.
Don't confuse these terms with bankruptcy, which in the UK specifically refers to an individial who has run out of cash - not a business.
Under this, Clintons, which was previously owned by AG Retail Cards Limited, today went into administration.
But the Clintons brand and its assets - its shops, staff and website - were today sold to a new company called Esquire Retail Limited.
It just so happens that both companies are owned by the Weiss family.
KPMG has been appointed administrator to the old company, and anyone owed cash by the firm will have to apply for their money with no guarantees they'll get it back.
The company's debts will also remain with the old AG Retail Cards Limited business.
Clintons had explored the option of a company voluntary agreement (CVA) but its landlords wouldn't agree to the plans, meaning it had no option but to place itself into administration.
CVAs are a type of insolvency used when a company is running out of rope and needs to cut costs.
But these plans require the agreement of creditors and they have a big effect on the income landlords earn.
KPMG points out that the pre-package administration has been approved by independent body the Pre Pack Pool.
Eddie Shepherd, chief executive of Clintons, said: “We are pleased to have been able to secure the future of the Clintons business, protecting all of our talented 2,500-strong workforce and ensuring continuation of trade across all of our UK store network at what is a crucial time of the year for the business.
“Like so many of our fellow high street retailers, we have worked tirelessly to contend with the maelstrom of issues impacting the sector, from business rates pressures, to fragile consumer confidence and the lack of clarity around the taxation of online retail businesses.
“We are confident that this deal will kickstart a new chapter for our business.”
Sadly Clintons isn't the only retailer to be in financial difficulty this year.
More on money
The first half of 2019 saw a record net 1,234 stores disappear from Britain’s top 500 high streets according to PwC.
In November, Mothercare went under with plans to close 79 stores leaving thousands of jobs at risk.
While Clarks has brought in restructuring specialists to look at its business.