Thousands of jobs are risk after the owner of edinburgh woollen mill and peacocks signalled its intent to appoint administrators, staving off claims from creditors as it assesses its options during the coronavirus pandemic.
The ewm group, controlled by retail billionaire philip day, filed a notice of intent to appoint frp advisory as administrators on friday. it also owns homewares group ponden mill and upmarket brands jaeger and austin reed and employs 21,000 people, the company said.
Steve simpson, ewm chief executive, said in statement that the move was intended to secure a short breathing space to assess our options before moving to appoint administrators, but warned that there will inevitably be significant cuts and closures.
We have found the past seven months extremely difficult, mr simpson added, blaming a recent deterioration on a series of false rumours about our payments and trading which have impacted our credit insurance.
The rumours centred on allegations, which it denies, that it had withheld payments to bangladeshi suppliers during the pandemic.
This, combined with the effects of the initial 12-week closure of non-essential stores that ended in june, reduced footfall in many locations and fears of a second national closure have made normal trading impossible.
The edinburgh woollen mill brand is heavily exposed to tourist centres such as princes street in the scottish capital, while almost half of peacocks 500 stores remain closed. online sales make up only a small part of revenue.
The possible appointment of frp, which is also running the light touch administration of department store group debenhams, comes just weeks after reports of unsolicited bid approaches for ewm and other parts of mr days retail empire.
That interest led to what people familiar with the process described as an open-ended exploration of the value of the business. frp was also conducting this process. ewm declined to comment on the progress of the review or its conclusions on friday.
Some restructuring experts believe the notice of intent makes it more likely that the group will be pushed through a prepack administration, with mr day the most likely buyer of some or all its assets.
The government indicated on thursday that it intends to legislate for greater scrutiny of prepack administrations involving existing shareholders or directors, amid concerns that they may not be in the interests of the insolvent companys creditors.
However mr day, who is based in the swiss resort of verbier and controls ewm through dubai-registered spectre holdings, is also a secured creditor to the group.
The size of the companys workforce has been amended in this article following confirmation