Men’s retailer Moss Bros is the latest to go the route of a company voluntary arrangement to conduct a financial restructuring in the wake of an ongoing coronavirus pandemic.
The arrangement, or CVA, allows companies to work out deals with landlords and other creditors. It’s a move that helps companies avoid slipping into administration, an event that could mean liquidation down the road. CVAs tend to provide a better recovery for creditors than either an administration proceeding or a liquidation.
In the case of Moss Bros, which operates 128 stores and employs 800 staff members, the plan is for the CVA to help it restructure its fixed cost base. But creditors will need to vote on the plan, and a minimum of 75 percent of its creditor must approve of the plan. That vote will take place in 14 days.
“At the outset of the pandemic, we managed to reduce costs and furlough staff in order to survive the first lockdown. There was then a glimmer of hope as we began to re-open some stores in the summer period, but even then trading was severely impacted, footfall was extremely low and sales were substantially down on the previous year,” Brian Brick, CEO, said.
The menswear retailer has been hard hit by the coronavirus pandemic, which forced the cancellation of special occasion events, such as weddings, proms and even Royal Ascot, as well as a reduction in work wear for the office. Moss Bros saw a slow down in both its formalwear business and in its overall men’s apparel sales.
The retail chain inked a deal in March to be taken over by Brigadier Acquisition Co., the owner of Crew Clothing, for 22.6 million pounds ($27.9 million). But about six weeks later after Moss Bros and all other nonessential retailers were in temporary shutdown mode, Brigadier tried to retract its offer for the 169-year-old men’s chain. The transaction eventually closed in June.
All nonessential retailers suffered additional financial pressures when they were again forced to undergo temporary lockdowns on Nov. 5. The retailers expect to be able to reopen on Dec. 2.