New Look Suppliers Increase Risk Of Bankruptcy

In early March, Company Voluntary Arrangement (hereinafter referred to as CVA) was confirmed as voluntary arrangement and closed shop. New Look Group Ltd. of the British clothing group was hit again.

According to the world clothing and shoe net, HSBC HSBC has cancelled the credit insurance of several British brands, though the number of suppliers involved is not large, but this means that

The risk of bankruptcy is aggravated and it may be insolvent in the future.

The above action is also a more radical move made by HSBC at the end of last year to reduce the New Look supplier's credit guarantee contract in response to the current situation of New Look.

Credit insurance is usually a tool used by suppliers to reduce the risk of bad debts of accounts receivable, once it is supplied.

In case of bankruptcy and inability to pay the loan, the supplier can obtain payment or financing with the policy.

Previously, Euler Hermes Yi Xin Bao had stopped covering the logistics of New Look, and QBE Queensland insurance group also reduced the coverage of British brands.

For the above reasons, a spokesman for New Look said that he did not comment on the situation of individual suppliers, and reiterated that the company had enough liquidity to pay suppliers.

The spokesman also said that the company will continue to work closely with the core strategic suppliers who provide more than 80% of the brand with confidence in the supply mode.

At the beginning of last month, New Look appointed Deloitte LLP DDT partners Daniel Butters and Neville Kahn as CVA protocol agents.

DDT partners Daniel Butters appease the parties that New Look is the landmark high street brand in the UK, and the CVA agreement aims to provide a stable platform for the management's recovery plan to be realized.

He also stressed that it is important to emphasize that closing operations will not be completed within one day, and that all employees, suppliers, owners' salaries, payments and rents will be paid on time and in full.

The CVA agreement of New Look includes closing 60 of the 593 stores in the UK, and converting the other 6 to third party operations, and the other 393 will suggest that the owners reduce the rent.

The above shops and rent reduction may result in layoffs of up to 980 people, accounting for 6.4% of the group's current 15300 employees.

The agreement was also supported by the British Property Federation British real estate Federation.

In the future, New Look is in doubt. After being reduced to 0 by major shareholders in South Africa, Alastair Walker, a non-executive director of Dongan's large group in South Africa, announced the departure this month. The task of regrouping the group is entirely the responsibility of executive chairman Alistair McGeorge.

In 2011, Alistair McGeorge rescued New Look from the debt quagmire and led the brand back to the right track. However, the current retail environment and the problem of New Look are far more serious than they were 7 years ago.

Because of the radical expansion in the Chinese market and the British mainland

New Look has fallen into the plight of performance degradation, return to losses and liabilities of 1 billion 200 million pounds, and the bad thing is far more than that. Its South African boss, Christo Wiese itself, has been battered by the financial fraud at the end of last year due to the holding of retail International Steinhoff NV (SNHJ.J) (SNH.F), and its assets have shrunk sharply and assets have to be sold off.

At the beginning of March, creditors of New Look had hired the Rothschild agency debt problem of the investment bank, which meant that New Look might face a debt restructuring, leading to the substitution of large shareholders.

Judging from the actions of New Look and major shareholders, the reorganization of Alistair McGeorge will decide the future of New Look, but with the current end of the same brand, the possibility of a narrow escape is totally zero.

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