An “acute liquidity crisis” after disappointing Christmas sales led to the collapse of prominent Perth shop Beales, administrators have found.
Beales, which took over the former McEwens site in St John Street, collapsed in January with the loss of more than 1,000 jobs nationwide.
Administrators Will Wright and Steve Absolom from KPMG estimate the total debts in the Bournemouth-based company, which operated 23 shops, will reach more than £22 million.
Beales, which can trace its history to 1881, was offered to more than 100 potential buyers before it folded.
The report explains: “Prior to administration, the directors had instructed an extensive marketing process to explore the investment, refinancing and sale options available to the business.
“During the process 117 financial and trade investors were contacted to determine their interest in the business.
“Whilst 11 of these parties signed non-disclosure agreements and were provided with further information, unfortunately no solvent offers for the business were received.”
Meanwhile, the firm’s trading arm, JE Beale Public Limited Company (JEB), continued to face an “extremely difficult retail environment”.
“With the impact of high rents and rates exacerbated by disappointing trading over the most recent Christmas period…JEB was facing an acute liquidity crisis,” the report added.
Beales has grappled with an increasingly difficult retail environment for several years.
In 2016, JEB entered into a company voluntary arrangement with landlords which led to eight stores closing and rent reductions agreed at two premises.
This did not stop the firm from moving Perth with its first, and last, store in Scotland in 2017.
The administrators found there’s likely to be a multi-million-pound shortfall on a defined benefit pension scheme that was closed to new members by the time Beales came to Perth.
The most recent valuation of the scheme, from October 2016, showed a £7.85m deficit and the administrators said it was liaising with the scheme to determine an up-to-date figure.
The scheme is secured up to £8.4m by way of fixed charges in respect of some of the properties owned by the companies.
However, the administrators predict the firm’s property assets that had a book value of £13.5m will fetch just £5.2m.
The pension scheme is one of two secured creditors, the other being bank Wells Fargo, which provided a rolling credit facility and a term loan which were drawn down to £12.6m.
“It is currently anticipated that the secured creditors will suffer a significant shortfall in respect of the funding provided to the company and the wider group,” the report states.
The Pension Protection Fund (PFF) is currently assessing the value of Beales’ defined pension scheme.
If it does not have sufficient assets, it will transfer to PFF. People who have passed the scheme’s normal retirement date will have their pension paid in full.
People who have retired early or who have yet to retire will receive a pension equal to 90% of the value of the pension promised.
rmclaren@thecourier.co.uk