Insolvency professionals have long been predicting a wave of trouble would hit the beleaguered UK high street and it has come to pass with Kirkland & Ellis and Eversheds Sutherland securing lead roles on the collapses this week of Toys R Us and Maplin.
Toys R Us announced today (28 February) that its domestic business was going into administration following a failed attempts to secure a new buyer for the UK’s largest toy retailer after sluggish trading hit the industry over the 2017 festive season.
Kirkland also acted for Toys R Us on the Chapter 11 filing for bankruptcy of its US business in September 2017, as well as a deal with the Pension Protection Fund (PPF) that temporarily saved the company from collapse in December 2017.
Kirkland restructuring partners Kon Asimacopoulos and Elaine Nolan are advising Moorfields’ joint administrators Simon Thomas and Arron Kendall.
Meanwhile, Eversheds’ team, led by Manchester restructuring partner David Gray, is advising Maplin’s joint administrators at PwC, which is fielding a team under partner Zelf Hussain.
Eversheds in 2014 advised Maplin on the consumer electronics retailer’s £85m sale to investment house Rutland Partners. Taylor Wessing is now advising Rutland, a long-standing client which it acted for in a number of deals last year, including the sale of Brandon Hire, the acquisition of Armitage Pet Care and an investment in Omar Group.
Gray said the Maplin business would continue to trade for a number of weeks in the hope of a sale, given the strength of Maplin’s brand. He added: ‘The high street’s having a tough old time at the moment.’
PwC’s Hussain commented: ‘Like many other retailers, Maplin has been hit hard by a slowdown in consumer spending and more expensive imports as the pound has weakened. Our initial focus as administrators will be to engage with parties who may be interested in acquiring all or part of the company.’
Maplin has annual turnover of £235.8m and employs 2,335 people across 217 stores in the UK and Ireland. Toys R Us, meanwhile, has 105 stores and employs 3,000 people in the UK.
‘It’s only going to get worse,’ notes one Magic Circle partner. ‘Furniture retail, department stores and casual dining are all expected to feature among the high-street casualties over the coming months.’
Nathalie.tidman@legalease.co.uk
For more on the insolvency market see last year’s report, ‘Waiting for Carney’ (£)