UK DIY News
Focus closing down sale brings in £100m
THE closing down sale at Crewe-based retailer Focus DIY brought in more than £100m for creditors, although unsecured creditors owed more than £820m are unlikely to see any of the cash.
A newly-filed progress report by administrators Simon Allport, Tom Jack and Alan Hudson from the Manchester office of Ernst & Young, shows that they raised £100.6m trading from the group's stores during the period following their appointment on May 5 through to the last store closure on July 22.
A profit of over £9m was made on stock worth £91.5m either held or bought during the period.
Administrators have also raised £45.8m through assigning property leases of the more in-demand stores to other retailers.
B&Q owner Kingfisher paid £23m for 31 store leases, Wickes paid £8.4m for 13 store leases, Liverpool-based B&M paid £1.3m for 21 store leases and fellow discount retailer TJ Morris paid £200,000 for two leases.
Supermarket giant Asda paid the most per store - shelling out £11.5m to buy four sites, while landlords also paid £1.3m to administrators to take back leases which they could re-let.
"Through continued dialogue with landlords of the group's property estate, further lease disposals have completed, securing rent-free periods for the administrations, mitigating trading costs and/or limiting unsecured claims arising under the leases," the report said.
At the date of Ernst & Young's appointment, Focus DIY held leases on 208 stores (although it only traded from 177) and employed over 4,000 people.
Administrators have since managed to re-assign or agree to surrender 98 of these, but have yet to agree deals on the remaining 111 units.
Some 1,114 employees transferred to purchasers of the new sites, but the remainder have all subsequently been laid off following the store closures and the subsequent closures of its head office in Crewe, as well as its distribution depot in Tamworth and support centres in Crewe and Paulton.
Administrators have said that secured lenders GMAC and Bank of Scotland have been already been paid the £32.2m they were owed in full, while FLP3 - an investment vehicle used by Focus's former private equity owner Cerberus Capital - has received £25m of the £214.7m it was owed as a secured lender.
However, as preciously indicated it will not be paid in full so unsecured creditors are unlikely to receive anything. Although they are owed more than £821m, only £600,000 could be made available to them through insolvency rules governing property sales.
Ernst & Young said the small amount they would receive - less than 1p for every £1 owed - and the quantum of claims faced (over 15,000) would mean the cost of distributing payments "would be disproportionate to the benefits".
Administrator Ernst & Young's own fees for handling the administration have topped £4.6m - although it has only drawn down £3m to date. It has billed more than 4,500 chargeable hours to date.
Joint administrators Simon Allport and Tom Jack said: “Despite difficult market conditions in the retail sector we successfully traded the business, for 11 weeks achieving sales in excess of £100m, realising an excellent return for stock held at appointment.
"Importantly, we were pleased to achieve the sale of option agreements for 58 stores, resulting in the transfer of 1,200 jobs and further realisations of c£46m.”
Source : Mike Fahy - The Business Desk North West
www.thebusinessdesk.com/northwest/news/257749-focus-closing-down-sale-brings-in-100m.html?news_section=4158
I find the news and articles they publish really useful and enjoy reading their views and commentary on the industry. It's the only source of quality, reliable information on our major customers and it's used regularly by myself and my team.