The West Midlands company, Grabal Alok (UK) Limited, better known as ‘Store Twenty One’ entered liquidation on 11 July 2017 on the making of a winding up order by the High Court. This is the latest casualty in the retail sector amongst challenging market conditions which also saw Jaeger enter administration earlier this year.
This is not the first time Store Twenty One had faced financial difficulties, the company having entered into a company voluntary arrangement on 15 July 2016. A ‘company voluntary arrangement’ (commonly known as a CVA) is an agreement which binds all of a company’s unsecured creditors, whereby the company and its creditors agree a repayment schedule which typically elongates the repayment period or reduces the amounts due in satisfaction of the debts owed. A CVA usually creates a better return for creditors because the company is able to continue to trade and creditors as a result receive more than they would otherwise expect to be paid if the company entered administration or liquidation; further, there is usually some form of third party funding in a CVA providing further cash for creditors, which would otherwise be unavailable if the company entered a formal insolvency process.
The approved CVA provided a compromise between Store Twenty One and its creditors (primarily HMRC and the landlords of more than 100 of its stores), which was reported at the time to have saved around 1200 jobs. However, by April 2017 HMRC had issued a winding up petition against the company for failure to comply with its repayment terms as provided for by the CVA, which resulted in it finally being wound up.
One of the liquidators appointed, Simon Bonney, commented: “The traditional retail sector continues to face significant challenges, not least with the changes in business rates. The company was founded in 1932 and unfortunately it is another example of the difficulties arising in the current economy.” It is reported that competition from rivals such as Primark led to a reduction in turnover and sustained losses for Store Twenty One which, ultimately, it was unable to overcome.