Frasers calls for inquiry as it misses out on Peacocks
Frasers’ empire-building has come to a temporary halt with news the group has failed in its bid to buy Peacocks out of administration. And group head Mike Ashely isn’t happy. He’s called on MPs to investigate the sale of the failed UK women’s fashion chain to associates of former owner Philip Day.
On Tuesday, EWM Group, the private investment firm controlled by the Day family, said it was providing a deferred loan to a management buyout of Peacocks led by Steve Simpson, the chief executive of Edinburgh Woollen Mill and Day’s lead associate.
Frasers Group, however, said that it was frustrated with the unwillingness of administrators at FRP "to engage substantively" or "to provide key financial information" so it could make an informed offer for the chain.
The auction win means Simpson will retain 200 of the 423 Peacocks stores it had when it collapsed in November and save around 2,000 of its 4,369 jobs.
The buyout is also being supported by a group of unnamed Middle East investors, understood to be associates of Day, who are providing working capital to help support Peacocks’ return to trading.
In a letter seen by the Guardian, Mike Lennon, a restructuring expert at Duff & Phelps acting for Frasers, claims that Ashley’s retail group had “lost all faith in the process” after a “number of obstructions”.
A stock market statement released by Frasers on Tuesday also complained that the actions of the administrators FRP and Day had made it “virtually impossible” for Frasers or another third-party to buy Peacocks.
The letter to FRP, which handled the insolvency process and sale of Peacocks, claims that a £66m bid by Frasers was topped by Simpson’s group after being put to Day, who has significant influence over the future of the fashion chain as its key secured creditor.
Frasers also claims that Peacocks’ intellectual property rights (IP) – the right to use its brands and logos – were reassigned shortly before the chain was put into administration in an attempt to deter outside bidders.
It's to raise its concerns with the all-party parliamentary group on fair business banking, which is conducting an in-depth investigation into standards in the UK insolvency profession, in response to claims that some practitioners are prioritising lenders’ interests over those of business or other creditors.
But a spokesperson for the Peacocks’ administrators at FRP told the newspaper: “All of our sales processes are fair, robust and conducted confidentially. All interested parties are given the same access to information and outcome of those processes and our statutory investigations are communicated, in line with our duties, to creditors at the appropriate time.”
The structure of the Peacocks buyout is similar to those agreed in January for Day’s Bonmarché, Ponden Home and Edinburgh Woollen Mill chains, which are all now run by Simpson.
Day, who declined to comment, will not be involved in the running of the Peacocks businesses but retains a level of control as a significant secured creditor to Peacocks and Purepay Retail, the vehicle that owns Edinburgh Woollen Mill, Ponden Home and Bonmarché.
Meanwhile, Peacocks owes unsecured creditors around £70 million, including £29 million to landlords, £23 million to suppliers and almost £9 million to HMRC.
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