Leading analyst warns of difficulties for Kwik Save creditors if the current situation worsens.
Patricia Godfrey, head of restructuring and insolvency at Nabarro and president of R3, commented on the impact the 79 store closures on Kwik Save’s many creditors: “This is a very worrying time for employees and creditors of Kwik Save. In March the company seemed set for administration but was saved at the door of the court. It remains to be seen whether attempts will now be made to place the company in administration. Such a step could provide financial breathing space to explore some form of rescue. But retail sector rescues have been hampered by the recent Trident court ruling which held that administrators pay business rates even on unoccupied premises whilst trying to find a buyer. This will undoubtedly push some companies into liquidation that otherwise might be saved with the consequent loss of jobs.
“For creditors the outlook can be equally grim if the company goes into administration landlords and other creditors will be prevented from taking any form of enforcement action,” Godfrey added.
“Although the recent Powerhouse ruling gave comfort to landlords by deciding that an insolvency procedure could not be used to indiscriminately strip away guarantee liabilities of retail groups, today’s news highlights that these are worrying times for creditors of distressed retail groups.
