In a worrying trend for high-street retailers, Toys R Us and Maplin have announced their UK domestic businesses are going into administration, allowing Kirkland & Ellis and Eversheds Sutherland to land key insolvency roles.
Kirkland was led by restructuring partners Kon Asimacopoulos and Elaine Nolan, as the firm was called in to advise Moorfield as administrator on Toys R Us, while Eversheds Sutherland was led by David Gray advising PwC on the Maplin collapse.
Maplin has an 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.
For Kirkland, this was an inversion of its position in December, where it secured a deal between Toys R Us and the Pension Protection Fund, which appeared to save the company from administration. This current role sees Kirkland continue a string of key mandates relating to Toys R Us, having acted on the Chapter 11 filing for the US business in September 2017.
Gray advised PwC – which assembled Zelf Hussain, Toby Underwood and Ian Green as its team of administrators – maintaining Eversheds’ longstanding relationship with the Big Four firm. This latest insolvency instruction continues a robust start to 2018 for Eversheds, securing roles in a flurry of M&A deals which has seen it advise British retailer Poundland and Spanish gym business Viva gym. 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 longstanding client which it acted for on a number of deals last year.
Gray said the work with PwC on Maplin involved exploring an array of options, such as a refinancing, before finally an outcome was agreed. With costs rising for retailers and consumer demand waning, insolvency professionals have been long expecting further trouble as retailers struggle for profits against increased rents. Casual dining could well be the next casualty, with restaurant chain Prezzo announcing a company voluntary arrangement recently.
‘It’s symptomatic of the difficulties present in the retail market, particularly for retailers with large property estates who have to compete with online retailers,’ said Gray.