AllSaints launches CVAs for UK and US stores
UK fashion retailer AllSaints has, as expected, unveiled company voluntary arrangement (CVA) plans for its British and US store chains.
The aim is for a minimal number of closures out of the 41 UK and 42 American locations and new rent deals that would see the amount it pays more closely linked to each site’s turnover.
The CVAs need creditor approval from its landlords, who are being asked to take a big hit to their income. The company will seek approval for the plans at separate meetings in the US on July 3 and UK on July 6.
The company hasn’t specified exactly how many stores it expects to close and just how small “a small number” of closures might be.
The process is being run by Richard Fleming and Mark Firmin, who are MDs of Alvarez & Marsal.
The UK stores are run through All Saints Retail Limited, while the leases for the US locations are held by American subsidiary AllSaints USA Limited. While there are other mechanisms in the US rather than CVAs for achieving the firm’s aims, because the subsidiary is a company that’s registered and managed from Britain, its able to pursue a CVA for the American arm.
The company has made applications to the courts in the US and Canada to recognise the CVA in both countries.
The retailer said “landlords in North America may be less familiar with the CVA process than landlords in the UK, [but] they will be able to benefit from a successfully implemented CVA under both UK and US/Canadian law”.
It added that North American “employees, suppliers, general unsecured creditors (other than landlords), secured lenders, tax claims held by any government unit or municipality, and parties to licences and contracts” won’t be “compromised or impaired in any way” by the local CVA.
But the firm isn’t putting its entire store estate through the process as there's still a large number of shops in other countries. It actually operates 255 shops in total in 26 markets and has 3,000+ employees worldwide.
And it still has plenty of potential globally, as well as in the UK and US markets. Pre-pandemic, it had seen five years of revenue growth and its results for the year to February saw revenue increases in all channels and regions.
However, there’s no denying that trading was challenging before the coronavirus and the effects of global store closures were devastating for the firm. It talked of the “substantial and sudden impact” that’s been exacerbated by having to reopen with ongoing social distancing measures and “significant uncertainty around customer appetite to travel and shop in-store”.
It said that to ensure the viability of the business, “a compromise with the group’s creditors is therefore now required”.
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