Store Twenty One and Linens Direct teeter on brink of administration

Around 1,000 jobs hang in the balance at the embattled fashion retailer as it races against the clock to secure additional investment.

And Retail Week has learned that the future of dozens more retail roles has been thrown into doubt after home furnishings business Linens Direct filed a similar notice of intention to appoint administrators.

As previously reported, Store Twenty One struck a rescue deal with creditors last July through a company voluntary arrangement (CVA), which allowed it to shutter 77 of its 202 shops and slash rents on a further 17 by 25%.

Landlords of more than 80 other stores were also asked to accept monthly rents rather than quarterly payments.

But according to documentation seen by Retail Week, Store Twenty One has fallen behind on those monthly contributions to the CVA and was presented with a winding up petition by HMRC on April 12 in relation to unpaid taxes.

According to a letter sent to creditors by Alix Partners – the firm drafted in by Store Twenty One last year to help restructure the business – rental payments that were due to be paid to landlords on March 22 and April 22 “remain outstanding”.

The letter adds that the retailer is “in discussions with its lenders with a view to seeking additional finance to ensure the ongoing viability of the business and continuation of the CVA.”

However, the document states that the retailer’s directors have “taken steps to appoint administrators”, which therefore “prevents creditors from taking enforcement action against the company.”

Store Twenty One is understood to have submitted the application to court on Friday, with a hearing date now set for May 26.

Store Twenty One and Alix Partners both declined to comment.

Turbulent times

The fashion chain’s struggles come amid a turbulent start to 2017 as retailers battle to adapt to the rise of online, increasing labour costs and the tumbling value of the pound following the Brexit vote.

As revealed by Retail Week, Jaeger tumbled into administration last month and has since shuttered 20 “financially unviable” stores and axed more than 250 jobs.

Jones Bootmaker was rescued by Endless in a pre-pack administration deal at the start of April, but its former stablemate Brantano collapsed into administration.

The value shoe retailer’s stores are now likely to be sold off in parcels, with footwear rival Shoe Zone thought to be among those eyeing its shops.

In March, Retail Week revealed that 99p Stores had fallen into administration less than two years after it was acquired by value rival Poundland.