Austin Reed's creditors set to shed large sums after high street retailer's collapse

 
Helen Cahill
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Austin Reed Set To Close All 120 Stores With 1,000 Job Losses
Austin Reed went into administration in April (Source: Getty)

Austin Reed's creditors face big losses due to the collapse of the high street store, accounts from the administrators have revealed.

Documents filed in Companies House by the administrators for Austin Reed, Alix Partners, show the company's unsecured creditors will be given £600,000 between them after the collapse of the chain.

Read more: Austin Reed employees found out about store closures through social media

The unsecured creditors are owed over £30m, but only 2p in the pound is likely to be returned.

Wells Fargo is set to have its debts repaid in full, to the tune of £7.24m. Alteri Investors, which acquired Austin Reed in April, is owed £18.24m but "will suffer a significant shortfall", the administrators said.

So far 443 employees have been made redundant, and the rest will lose their jobs "as stores run out of stock".

Austin Reed collapsed in April - just days after BHS - and Alix Partners were appointed to deal with the administration.

The documents from the administrators reveal that store sales at Austin Reed suffered due to an increase in online sales.

"Despite undertaking the closure of certain unprofitable stores, a number of loss-making stores remained," the administrators wrote.

The company had to enter into a company voluntary agreement last year, resulting in 70 stores being closed, but sales continued to fall.

Austin Reed then faced "considerable creditor pressure" because suppliers were failing to get credit insurance due to being exposed to the group.

The high street brand then struggled to meet its capital requirements, leading to cash flow difficulties. Funding was not available from secured creditors, and a third party did not come in to save the group, making the company insolvent.

The administrators wrote that the business had been particularly worried that landlord creditors were going to take action "which threatened the ability of the group to continue to trade unhindered".

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