Fashion retailer Peacocks bought out of administration by international consortium

June 2021 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

June 2021 Issue

An investment consortium backed by Edinburgh Woollen Mill Group’s former chief operating officer, Steve Simpson, has bought beleaguered fashion retailer Peacocks out of administration.

The deal will see a leaner Peacocks survive, with 200 stores and 2000 jobs saved. No additional redundancies will be made in the immediate future, though Peacocks has already closed 200 stores and made 2000 redundancies since the outbreak of COVID-19 in early 2020.

Peacocks’ new owners planned to reopen the company’s remaining physical stores after 12 April, when non-essential retailers in the UK were permitted to do so. In a statement, they said that the company hoped all 1850 store staff, who were furloughed at the time, would be able to return to work, as well as more than 150 employees in Peacocks’ head office and support functions.

Mr Simpson and his Dubai-based consortium were not the only party interested in reviving Peacocks – Mike Ashley’s Frasers Group had expressed an interest, however the group supposedly was not provided key financial information on Peacocks following that expression. Frasers Group said it was “frustrated” with the unwillingness of administrators at FRP Advisory “to engage substantively” or “to provide key financial information” so it could make an informed offer for the retailer.

Frasers Group said that its advisers participated in discussions with Peacocks’ administrators at FRP Advisory and representatives of Edinburgh Woollen Mill Group, which was owned by Philip Day. However, on 27 March Frasers Group wrote a letter to FRP Advisory claiming it had insufficient access to Peacocks’ financial information. “At no point in the discussions were the secured creditor or the joint administrators prepared to allow Frasers Group the same access to key stakeholders and information as the purported purchaser was allowed”, Frasers Group said in a statement.

Frasers Group has also expressed scepticism about the handling of the sale and called on parliament to investigate the process, as well as the administrators. “Throughout the process Frasers Group raised questions specifically around the rationale and information provided in relation to the assignment of Peacocks intellectual property to a third party in the early part of 2020 prior to the Joint Administrators being appointed”, the group said in a statement. “Evidence was provided to the Joint Administrators that undermined the authenticity of the assignment documentation provided to support the assignment which we strongly believe warrants further investigation by the Joint Administrators.”

Mr Day was Peacock’s biggest creditor. Administrators from FRP negotiated a deal with Mr Day by signing a deferred loan agreement between a consortium of investors and the businessman which will eventually see him recoup the cash he invested in Peacocks as a secured creditor through various rescue deals. Unsecured creditors are expected to miss out entirely, however. The deal will effectively end Mr Day’s long and direct involvement in the British retail sector as he focuses elsewhere.

UK retail was under sustained pressure even prior to COVID-19, due to the emergence of online rivals. However, the sector has suffered significant losses during the pandemic, with the likes of Debenhams and Topshop also collapsing.

Peacocks and Jaeger, a sister fashion retailer also owned by Edinburgh Woollen Mill Group, entered administration in November 2020, citing the pandemic as the main driver for their collapse, though the group claimed it was in talks with potential buyers for both companies. The Jaeger brand was bought out of administration by UK high-street mainstay M&S in January 2021, though the deal is only expected to cover the brand’s intellectual property, allowing M&S to sell Jaeger-branded goods on its website as a third-party brand. As such, no store staff from Jaeger are expected to keep their jobs and all physical sites are expected to remain shut.

Richard Summerfield