Fashion retail group Monsoon Accessorize, which operates retail chains Monsoon and Accessorize, is on the brink of filing for insolvency, putting 3,500 jobs at risk.

With 230 stores across the UK, the group is expected to begin the steps to file for administrators as early as today.

UK firm FRP Advisory has been working with Monsoon Accessorize since March after the retailer was required to close stores due to the Covid-19 coronavirus lockdown. FRP was appointed to explore a sale of the business.

According to Sky News, “inside sources” said that Monsoon Accessorize owner Peter Simon intends to buy back a smaller version of the business should it go into administration, reopening many of the stores.

Where did the business go wrong?

Last year, Simon injected £12m into the brand through a restructuring deal, which took the form of a Company Voluntary Arrangement (CVA). Through the CVA, 40 stores were closed permanently while 135 stores had rent bills cut.

According to Business Sale Report, analysts have suggested that Monsoon Accessorize’s focus on occasionwear means that it has been particularly susceptible to the impact of the pandemic, which has been damaging fashion chains globally. Other fashion chains to be impacted by the virus include Matalan and J.Crew.

Though the Covid-19 coronavirus pandemic appears to be largely to blame for the business needing to enter administration, the retailer had already been seeing difficulties beforehand. To the year ending 24 August 2018, the company reported a turnover of £296m, which was a decrease from the £310.9 from 2017.

What are the next steps for the retailer?

Sources indicate that Monsoon Accessorize founder Peter Simon is considering a rescue deal for the company and has also promised to reduce the company’s London head office £5m rent by 50% to reduce costs.

Sky News said that “a person close to Monsoon Accessorize” told the news source that Simon will today be writing to company’s landlords asking for a rent-free deal and that landlords which refuse the request are likely to see shops closed.

Monsoon Accessorize is yet to confirm these claims.