LONDON (Reuters) - The country’s second-largest floorings retailer Allied Carpets went into administration Friday, becoming the latest victim of recession and putting at risk up to 1,100 jobs.
Business restructuring firm BDO Stoy Hayward said it had been appointed administrator of the retailer’s trading unit AC (UK) and its property unit Allied Carpet Properties.
In a process known as pre-pack administration, BDO immediately sold 51 of Allied Carpets’ 217 stores and its insurance inspection business to Allied Carpets Retail — a new vehicle formed by the retailer’s previous management and owners Valco Capital Partners, whose lead investor is restructuring company Hilco.
BDO said the deal safeguarded about 400 of the group’s 1,500 staff.
It said it was working to secure a going concern sale of the remaining 166 stores in the Allied Carpets portfolio and hoped “some” additional stores would be acquired by the new business over the next two weeks following negotiations with landlords.
All customer deposits were safeguarded, all outstanding customer orders would be fulfilled and all staff wages paid.
Allied Carpets has been hit hard by the slowdown in UK consumer spending, paralysis in the housing market and soaring unemployment — factors which resulted in a spate of retail failures earlier this year, including Woolworths, which closed its doors in January with the loss of 27,000 jobs.
“Allied Carpets is a well-established brand in the marketplace but like many other companies, has suffered because of the economic climate and difficult trading conditions,” said Dermot Power, a partner at BDO.
“The stagnation in the housing market has meant that fewer people are buying carpets and flooring.”
Clive Hutchings, Allied Carpets’ chief executive, said the new business has secured new working capital facilities.
Carpetright Plc, the UK’s no. 1 carpet retailer, has said it would be interested in acquiring some Allied Carpets stores.
Carpetright’s shares were up 1 percent at 616 pence at 3:11 p.m.
Editing by Mark Potter and Rupert Winchester