Allders - Hilco Capital

Allders
Debt acquisition, operational management,
store closures and property disposals
Background
Having incurred significant trading losses for a number of years,
department store group Allders was facing administration.
Lenders to the business believed their position was at risk and,
believing that they were unlikely to recover a significant proportion
of their loans to the company, decided to sell their secured debt
positions to a consortium of investors led by Hilco Capital.
The Transaction
process which also meant that revenues were increased and the
traditional route of closing the store and paying costs without
revenue could be avoided.
Results
Over 3,500 jobs were saved as a result of this proactive approach
to retail administrations. Eventual total recoveries exceeded the
level of secured debt and, as a result, a significant payment was
made to the Allders Pension fund which had been substantially
underfunded at the time of the administration.
The Hilco consortium acquired £150 million of secured debt held
by Lehman Brothers at a substantial discount to par value. Given
the precarious financial position of the business, the company’s
directors decided to appoint Administrators.
Uniquely within UK insolvencies, Hilco then provided £15 million
of additional working capital to the Administrators in order to
extend the lifespan of the administration, thereby securing a more
orderly disposal of the business and assets than would otherwise
have been possible. The Administrators appointed Hilco Capital
to manage the operation of the 45 department stores while this
process took place.
Hilco’s Role
Hilco’s retail support specialists were appointed to assist the
Administrators in the day-to-day operation of the company’s
stores, including one of the UK’s largest department stores, so
that the Administrators were able to extend the period of trading
while stores were sold to other retailers.
Hilco successfully managed the sale of £200 million of stock
during the process and negotiated arrangements with concession
houses to participate in the sale process, realising a further £30
million in sales. In addition, a further £20 million of stock was
sourced and funded by Hilco Wholesale.
Through Hilco’s involvement, 30 Allders stores were able to
continue trading throughout a transfer process to other retailers
including Debenhams, BHS and Primark. In the case of BHS,
this transfer was managed by controlling a unique ‘backfilling’
Key Facts
Result
›Chain of 45 department stores with
› £30m additional revenue
a turnover of £800m
›Provided £15m working
capital to extend the administration
›Disposed of £200m of
inventory
›Sourced £20m of augment
stock
www.hilcocapital.com • Tel 020 7317 2050
generated through negotiation
with concessionaires
› Managed negotiations with
suppliers to reduce Retention of
Title claims and ensure continuity
of supply
› 30 stores transferred to secure
high street retailers