Some 1,400 jobs have been threatened as online retailer Studio Retail has formally appointed administrators.
The value retailer, whose largest shareholder is Mike Ashley’s Frasers Group, has formally appointed Teneo as administrators, The Times newspaper has reported.
Studio suspended its shares last week and said HSBC rejected its request for a short-term £25m working capital loan.
The Accrington-based firm said the loan would have been used to fund surplus and the £25m sum would have been “ sufficient to enable it to sell through the stock to customers.”
The Frasers Group holds a stake of around 29 per cent in the firm, which started as an catalogue gift retailer and has expanded to reach 2.5m customers.
Alex Jay, head of insolvency and asset recovery at law firm Stewarts, said: “Shipping costs and delays have been cited as the reason for Studio’s need for financing – but HSBC obviously don’t think that is a short term problem, fixable by a short term loan.
“This could be a worrying sign for other businesses exposed to the global shipping market, at a time when government support in the wake of Covid is being wound down. Commercial lenders will of course adopt a much more hard-nosed approach to any financing requests as we have seen here.”
In a trading update last month, Studio Retail said its adjusted pre-tax profits for the full financial year were expected to be well below previous market expectations of £35m.
Shares took a hit to the tune of more than 35 per cent, following the January update.
The Union of Shop, Distributive and Allied Workers (Usdaw) said it was seeking urgent meetings with management after Studio announced an intention to appoint an administrator.
Usdaw area organiser, Julia Baldwin, said “This is obviously very worrying news for our members. Our priority is to secure jobs and we are providing our members with the support, advice and representation they need at this difficult time.”