Scottish fashion and homeware chain M&Co is set to enter a pre-pack administration in which the McGeoch family, which owns the chain, will buy back the business.
The pre-pack insolvency deal would see all M&Co assets sold back to the McGeoch family, according to Sky News. Under the deal, 50 stores are expected to face permanent closure along with hundreds of jobs. Sources, however, indicate that the majority of 2,700 employees would keep their jobs.
In June, M&Co employed Deloitte to search for new investors following a sales slump. At the time, the store was said to be seeking a partial or outright sale to be undertaken through pre-pack administration.
There are 262 M&Co stores across the UK; the majority of these stores reopened once lockdown restrictions were eased for retail in England at the start of June – in Scotland, non-essential stores did not re-open until 29 June.
What is a pre-pack administration?
A pre-pack administration, or pre-packaged insolvency, is a bankruptcy procedure where the sale of a business and/or its assets is agreed before the company declares insolvency.
By entering into a pre-pack administration, the cost of trading is avoided and business continuity is upheld. This differs from trading during insolvency, where the business might not be able to be traded if no funding is available.
Because of the reduced costs that come with a pre-pack administration deal, there is usually a greater return to creditors.
Further jobs losses and store closures across the UK
Today, retailer Dixons Carphone, which owns Currys PC World, announced plans to cut 800 jobs as it aims to focus on customer service. Roles being removed will include retail manager, assistant manager, and team leader roles.
Yesterday, Dave Whelan Sports (DW Sports) entered into administration. The retailer, which operates 73 gyms and 50 retail sites, closed 25 stores before administration and is now starting to close down sales in remaining stores. Due to this administration, 1,704 jobs are at risk.
Last week, travel company TUI revealed plans to close 166 stores across the UK and Ireland, leaving the company with 350 stores in these locations. The store closures will see roughly 630 of affected workers moved to a remote sales team while 270 roles will be cut.