Card chain Clinton is set to close 38 stores to avoid bankruptcy, according to reports (Image: PA)
It appears Clinton Cards is safe from collapse for at least the next 12 months, after a bankruptcy court approved a restructuring plan that will allow the retailer to pay business rates and rent in full for the 38 stores it is closing. Allows you to avoid payment.
The deal saves thousands of jobs that would have been at risk had it not been approved.
Under the plan approved today, landlords and local councils of 38 unprofitable sites would receive just 8.6p for every pound owed by Clinton, who was said by financial advisers to be currently insolvent. The closure of those 38 stores was first reported by The Times earlier this month.
Meanwhile its owners, who are also its main lenders, have agreed to provide a revolving credit facility which should be sufficient to keep the series alive for another 12 months.
The ownership group itself was owed £7.7 million, but agreed to reduce this amount to £5.3 million in exchange for more shares – which is the amount they would receive from administration or liquidation if the business collapsed. As they were already the sole shareholders, and shareholders have lower priority than creditors when a firm becomes insolvent, the transfer of debt to equity effectively meant that the owners would lose £2.4 million worth of funds. Have agreed to put in the firm. down in order of repayment priorities.
According to the reorganization plan, Clinton’s owners – Jeff and Zev Weiss – would only continue funding the business if it adopted a new business plan that would give it higher expectations of profitability. But with the closure of 38 loss-making stores and elimination of most of the associated rent and rate liabilities, they now see a way back to profitability.
However, with a loan facility lasting up to twelve months, if the business is still not profitable by that time it may again be at risk of bankruptcy.
The restructuring plan was submitted by restructuring experts FRP Advisory and law firm Jones Day.
Last year, Clinton was in talks with Paperchase about a merger of the two struggling retailers. However, the deal ultimately failed for commercial reasons and Paperchase collapsed into administration.
Jeff and Zev Weiss themselves led Clinton out of the administration in 2019 after the firm closed.