Restructuring and Insolvency in the UK Retail Sector

The political and economic landscape in the UK has changed drastically over the past 18 months. Political uncertainty over Brexit, rising inflation and the falling value of the pound combined with a long-term shift in consumer behaviour towards digital and online businesses have all had an impact on consumer habits, in turn affecting the retail industry.

We have already seen a number of high street casualties over the past few years; the high profile demise of BHS, Woolworths and HMV being just a few examples of many. 2017 has seen the fall of the likes of Jaeger and Store Twenty One and given the current economic climate, we are likely to see an increased number of insolvencies and restructurings in the retail sector in the near future. In its latest 2017 report covering October, the British Retail Consortium stated that footfall had decreased by 2% year on year.

Today Orrick launches the Retail Report which will focus on:

1. the restructuring tools available for stressed UK retailers including: company voluntary arrangements, pre-packaged disposals in administration, and schemes of arrangement, along with examples outlining the successful use of these tools and lessons which ought to be learnt from the failure of the use of some of these tools by distressed retailers;
2. retail specific issues: we address the issues that are relevant to retailers facing financial difficulties, including directors’ duties; notably the pressures on directors and what their drivers are in stressed circumstances; and
3. retailers currently in the news: we look at the capital structures of certain retailers that have been the focus of recent press attention.

In view of the looming financial pressures, we prepared our report as a practical guide to assist stakeholders in the retail industry (and other similar industries facing similar issues such as restaurants and leisure). Retailers, landlords, and investors will be wrestling with how best to cope with financial distress and we hope you find that the guide will be helpful and insightful.

To obtain a copy of the report, please click here.