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January 26 2009
RAINBOW IN SIGHT TO BRIGHTEN ‘GREY MALL’ SYNDROME?

AIM-listed shoe retailer Stylo plc, whose shares were suspended earlier today, has announced a plan for a solvent restructuring that, if approved, will secure the company’s long-term future and protect the interests of all stakeholders.

A sharp rise in the number of stores being closed or abandoned by distressed retail groups has fuelled fears of Britain’s shopping centres becoming like the ‘grey malls’ of closed premises in the United States. The glut of retail space may also have been accelerated by the use of pre-packaged administration, an insolvency tool whereby a business goes briefly into administration and is afterwards sold to a pre-agreed purchaser, thus bringing closure to certain property liabilities. The so-called ‘pre-pack’ has on the whole been problematic for landlords rather than trade creditors, as the surviving businesses still need to work with their suppliers.

The Stylo proposal is a turnaround plan based on a process called the ‘company voluntary arrangement.’ Under the proposal, all unsecured creditors will be paid; new capital will be introduced; pension liabilities and employees’ rights honoured; all stores retained for six months and turnover rental paid while landlords and tenant agree an orderly reorganisation.

The turnaround executive brought in to lead the restructuring is a Fellow of the Institute for Turnaround and the professional advisers are partners of the Institute. The Institute for Turnaround Chief Executive Christine Elliott said, “One major difficulty with pre-pack administrations is that they do not address the underlying operational problems of the business and so prevent many stakeholders from achieving full value. This proposal is an elegant alternative which lays the foundations for the company to enjoy a solvent future. It also shows the advantages of a turnaround professional working with other professional teams. Innovations in turnaround could help prevent the UK suffering from the ‘grey mall’ syndrome that is blighting US shopping centres.”

Information: Christine Elliott 020 7324 6244/07812 370121; celliott@instituteforturnaround.com

The Institute for Turnaround (IFT) is Europe’s leading professional body for the whole Turnaround Community. IFT was founded in 2000 as The Society of Turnaround Professionals. We represent a unique audience responsible for funding, structuring, negotiating and executing business turnaround that shapes the real economy. We have a membership of rigorously accredited turnaround executives and advisers, with corporate partners representing the best in law, accountancy, corporate banking and finance, private equity and other experts involved in the field.

This press release was distributed by ResponseSource Press Release Wire on behalf of Institute for Turnaround in the following categories: Business & Finance, for more information visit https://pressreleasewire.responsesource.com/about.