27th Jun 11
Jane Norman fashion chain ready for pre-pack administration
by Katie Naylor
Everything must go: Jane Norman closures move a step closer
Everything must go: Jane Norman closures move a step closer
US accounting firm Zolfo Cooper has been readied to put a pre-pack administration of stricken women’s fashion chain Jane Norman in place, as the company becomes one of the most recent symbols of distress on Britain’s high streets.
The proposal, which a court may rubber stamp on Monday and potentially threatens 1,600 jobs, leaves the company among a number of high street brands, including music specialist HMV and homewares chain Habitat, implementing widespread closures of stores.
Jane Norman, which targets women between 16 and 25, closed its 90 outlets over the weekend following the failure of PwC to sell the company. Sources close to the retailer admit it is getting ready to appoint Zolfo Cooper in order to implement a pre-pack administration. One source claimed that Edinburgh Woolen Mill and Debenhams are still in the picture.
Debenhams currently runs Jane Normans concessions, which means that along with the 90 stores the fashion retailer boasts over 200 outlets. It is believed that Debenhams, which has also experienced trading difficulties in recent years, is interested in acquiring the Jane Norman brand as well as its stock. Edinburgh Woolen Mill – which offers knitwear to a more mature clientele – may not be among the obvious bidders but does have a history of transforming troubled retailing companies.
It remains unclear how the process will develop; although, in the past, pre-pack administrations have been highly controversial. The practice involves selling a company’s assets immediately after it has gone into administration, which some experts believe generates a higher return as the goodwill of the company and business continuity are preserved.
However, pre-packs have also drawn criticism due to the fact that many feel the company simply continues to function as usual while discarding legitimate creditors, an example being when creditors were left with debts of £71m in 2009 after a deal which saved Cobra beer.
Debenhams and Zolfo Cooper declined to comment, while Edinburgh Woolen Mill and Jane Norman were unable to be contacted. Jane Norman currently has debts of £140m and is one of a number of high street names struggling to cope with the economic downturn.
Last week Habitat confirmed that all of its shops outside London were being placed into administration, a move which means as many as 700 jobs will most likely be lost. Home Retail Group, which owns Homebase and Argos, purchased the Habitat brand in Britain and its three top stores in the capital for £24.5m, but the remainder of the business is threatened with closure.
Elsewhere a radical restructuring has begun at Kesa, the electrical retailer which owns Comet, while the Clinton Cards chain is rumoured to be seeking private equity investors to support a £30m management buyout. Computer games retailer Game has also revealed a store closure plan, but shareholders are believed to be pushing it to be more aggressive.
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