What happened?

Toys R Us' failure was blamed on competition from online retailers, changing consumer spending habits as a result of inflation and increases in business rates.

Nevertheless, competing toy retailer The Entertainer announced sales growth of 6.8% and an increase in pre-tax profits of 37% last week. It does not show signs of succumbing to the pressures that led to the failure of Toys R Us.

How could retailers of similar goods, operating in the same market conditions have had such disparate experiences?

The High Court held that "final determination" signifies the very last stage of any proceedings, without the chance to appeal. Sberbank were therefore still bound by their undertaking to take no further steps in an arbitration against the Company.

This article was first published in Butterworth's Journal of International Banking & Financial Law. To access a copy click here. 

Key Points

In an article that first appeared in the Winter 2017 issue of RECOVERY, Matthew Tait, Partner at BDO, and Matt Hill, Senior Associate at Osborne Clarke, put together a blueprint for practitioners considering turnaround work.

There is more trouble for the British High Street as Toys R Us and Maplins have both entered Administration. Toys R Us' remaining stores are due to close once stock is sold as the Administrators have been unable to find a buyer. Maplins' stores remain open for now and the Administrators are still looking to secure a buyer, but so far have been unsuccessful. New Look has announced it will be closing 60 stores, and Carpetright has announced plans to close poorly performing stores.

Following a number of corporate governance failures in situations of insolvency, the Government has published a consultation paper (located here) aimed at cracking down on directors and employers behaving irresponsibly.

With so much news coverage, it is difficult to ignore the ‘Carillion effect’. It’s hard to see how anything good can have come from Carillion’s collapse, but perhaps one positive effect is its prompt to many businesses to take a look to see if they have their own house in order.

In January this year, construction giant Carillion entered into liquidation. In a sense its demise was sudden – the firm entered straight into liquidation rather than the more familiar administration procedure, meaning it had no meaningful assets that gave any prospect of the business, or any part of it, continuing as a going concern. But in another sense it was expected: a large failure of this type had been expected by industry watchers for some time.

There is no such thing when you look at the demise of some of Britain’s biggest household names on the high street which have included BHS, Woolworths and Jessops. The latest to join the critical list are electronics retailers Maplin and Toys R Us.

Electronics chain Maplin collapsed into insolvency on last month, making it the second retailer to succumb to a brutal winter for Britain’s consumer economy in the space of just over an hour. Graham Harris, who became chief executive only last month, said:

The Supreme Court has recently held that directors who have caused company property to be transferred to another company under their control may be liable to restore the proceeds even after expiry of the six-year limitation period.

Mr and Mrs Fielding were directors and majority shareholders of Burnden Holdings (UK) Ltd ("BHUK"), a holding company with trading subsidiaries including Vital Energi Utilities Ltd ("Vital Energi").