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Woolworths and MFI in administration - 11/26/2008 2:16:20 PM   
LadyEllen


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Joined: 6/30/2006
From: Stourport-England
Status: offline 		Two of the UKs best known retail chains are in administration this evening, with 30,000 jobs at risk.

Woolworths was apparently all OK until the banking crisis hit, despite having a £385 million debt hanging round its neck. Then the banks wanted their money back, pronto.

Some brave soul offered to buy the company for £1-00 and pay off £285 million on the spot with the rest to follow.

But the banks dismissed the proposal, and after more "strong action" from the Brown government (asking the banks nicely if they might possibly reconsider), they went ahead to put Woolies into administration.

Woolworths is an institution on the British high street, a company with a century of history and also the distributor of books and music to many leading supermarkets like "Walmart UK" (Asda).

Yet again we see that consideration for the poor bankers doesnt translate into any perception of the need to show the same unto others on their part.

NATIONALISE THE BANKS NOW.

E

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RE: Woolworths and MFI in administration - 11/26/2008 2:18:45 PM   
Raechard


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Joined: 3/10/2007
From: S.E. London U.K.
Status: offline 		Yeah but DFS is ok and they are still giving away sofas at 50% off the fake price. I have no idea how they can fund these sales.

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RE: Woolworths and MFI in administration - 11/26/2008 2:23:42 PM   
LadyEllen


Posts: 10931
Joined: 6/30/2006
From: Stourport-England
Status: offline 		This is discussed R in the "what to spend your tenner on" thread

E

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RE: Woolworths and MFI in administration - 11/26/2008 3:23:41 PM   
celticlord2112


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quote:

Two of the UKs best known retail chains are in administration this evening, with 30,000 jobs at risk.

For those on this side of the pond (like me).....what is "administration"?  Is that the UK equivalent of bankruptcy in the US?



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RE: Woolworths and MFI in administration - 11/26/2008 3:28:45 PM   
LadyEllen


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Joined: 6/30/2006
From: Stourport-England
Status: offline 		its a step prior to liquidation. a bunch of overpaid accountants come into run the firms, realise what assets they can to pay their wages and try to restructure with a view to selling off the whole or parts.  what they cant sell as a going concern is liquidated

E

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RE: Woolworths and MFI in administration - 11/26/2008 3:37:24 PM   
celticlord2112


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quote:

ORIGINAL: LadyEllen

its a step prior to liquidation. a bunch of overpaid accountants come into run the firms, realise what assets they can to pay their wages and try to restructure with a view to selling off the whole or parts.  what they cant sell as a going concern is liquidated

E

Ah....something of a cross between receivership and bankruptcy then.

And the banks decided that this was better then actually getting paid what they were owed--most of it right away?

Sounds like the banks are settling for less money than more.  Forced liquidations rarely get market value for the assets.


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RE: Woolworths and MFI in administration - 11/26/2008 4:15:38 PM   
Politesub53


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Status: offline 		CL, The term going bankrupt does not apply to companies in the UK. Only to individuals. Woolworths went into voluntary liquidation as far as i know. From waht i recall there are two types of this. Creditors Voluntary Liquidation, when directors state the firm can stay solvent for 12 months. Or Debtors VL, when directors state the firm is insolvent. Woolworths have over have £385 million of debt, and the biggest problem they face is they cant get anyone to insure them as a credit risk. So all suppliers have to be paid in cash. Like many other high street companies, they face so much competition from one stop supermarkets, that it is hard to compete. Here is a Q & A on the basic terms.

http://news.bbc.co.uk/1/hi/business/1578896.stm

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RE: Woolworths and MFI in administration - 11/26/2008 5:56:54 PM   
celticlord2112


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quote:

ORIGINAL: Politesub53

CL, The term going bankrupt does not apply to companies in the UK. Only to individuals. Woolworths went into voluntary liquidation as far as i know. From waht i recall there are two types of this. Creditors Voluntary Liquidation, when directors state the firm can stay solvent for 12 months. Or Debtors VL, when directors state the firm is insolvent. Woolworths have over have £385 million of debt, and the biggest problem they face is they cant get anyone to insure them as a credit risk. So all suppliers have to be paid in cash. Like many other high street companies, they face so much competition from one stop supermarkets, that it is hard to compete. Here is a Q & A on the basic terms.

http://news.bbc.co.uk/1/hi/business/1578896.stm

Terminology aside, if I understand the OP, the banks had an offer on the table whereby someone was going to pay them most of the £385 million and they turned their nose up at it.  If Woolworth's is going through Voluntary Liquidation, how likely is it the banks are going to get at least the £285 million promised in that offer?

Typically, in the US, a company being liquidated fetches pennies on the dollar for whatever assets there are.

If the banks get less then the £285 million offered initially, would it be fair to say they fucked up?


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RE: Woolworths and MFI in administration - 11/26/2008 6:19:48 PM   
Aneirin


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From: Tamaris
Status: offline 		What a sad loss if Woolies ceases to be, a shop I use a lot and a shop where the staff are always friendly and helpful. A sad loss it will be as where else would one be able to get essential items of haberdashery, stationary, small tools and fixings at such a realistic price, especially now as my local branch, store number 25 has recently become the most comprehensive supplier of quality art and craft materials anywhere in my city. Maybe they don't do so many big names, but then who wants big names for something as mundane as a kettle.

MFI, well I am surprised that operation has lasted thus this far, it got a name for itself in the eighties, Made For Idiots, affordable it was, but the quality of it's products was not quite it and often when in flat pack form, they suffered the anguish of customers when the customer found essential construction parts missing.

Perhaps it is that these shops that service the lower end of the market dying out is heralding things to come.


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RE: Woolworths and MFI in administration - 11/26/2008 6:42:08 PM   
LadyEllen


Posts: 10931
Joined: 6/30/2006
From: Stourport-England
Status: offline 		Oh I dont think we'll see the end of Woolies as a brand A; I think we'll see a lot of the stores close (esp in high rent/rates city locations) and others sold off as a going concern. Then there's the associated businesses like the division that supplies books and CDs to the supermarkets which are profitable - they'll get sold off on their own.

What will be left to liquidate will be little of Woolies as it is now. Hopefully the banks will get a damned good stuffing out of it (though thats short term from me as I'll be expected to participate in making up their losses presumably).

Ultimately Woolies didnt adapt to a changing market place as their place was usurped by out of town discount warehouse stores, the supermarkets and town centre discounters. But since when in this country have we expected companies to take the hit for poor management?

As for MFI - I shall shed no tears. Even I, with my limited skills and range of tools can and have built better furniture! My reasoning is, if I have to assemble the damned thing and its made of crap anyway, I might as well make it myself with better materials for about the same cost.

E

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RE: Woolworths and MFI in administration - 11/26/2008 7:43:05 PM   
Termyn8or


Posts: 18681
Joined: 11/12/2005
Status: offline 		This from across the pond, but may apply.

If what I have read in this thread is accurate as to the wares etc. sold at this place, there may be another factor. A shift in the general attention of the average consumer away from arts, craftsy stuff and things like that to more gadgetry.

For many many years, prior to the last few, know what the hottest selling item was during the Christmas season ? Batteries. Of late more and more things use internal rechargable batteries, but there was a time not so long ago that this was true.

The shift from making things to buying junk happened quite some time ago here, and of course the market responded. I don't know if they were affiliated but we had Woolworth stores here, but they were mainly known as a fabric shop, and a few other things.

I don't know if they still exist here, I haven't been to one in ages and I haven't even seen one in probably ten years. If the market doesn't support it, it goes away. I think they went away.

T

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RE: Woolworths and MFI in administration - 11/26/2008 9:53:06 PM   
Aneirin


Posts: 6121
Joined: 3/18/2006
From: Tamaris
Status: offline 		The artsy crafty section was only put in in the last three weeks, and what a range of stuff and at reasonable prices. Woolworths never used to offer this section, this is a new departure for them.

As to MFI , I knew a fireman who told me he had to rescue a girl who was tied to her bed, for three days, the reason being the partner was dead in the MFI wardrobe, wearing a batman suit, he had apparently stood on top of the wardrobe ready for a dive and the MFI wardrobe being the quality craftsmanship it is, the top panel gave way and batman fell in the wardrobe, breaking his neck on the rapidly upcoming side panel. There being a lesson, MFI furniture is not the best built.


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RE: Woolworths and MFI in administration - 11/27/2008 1:34:02 AM   
meatcleaver


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quote:

ORIGINAL: LadyEllen

NATIONALISE THE BANKS NOW.

E


I certainly agree with that sentiment, capitalists have certainly proved incapable of running them.

It shocking that taxpayers are expected to refinance the banks and in their turn banks penalize the taxpayers that are forced by the government to support them.

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RE: Woolworths and MFI in administration - 11/27/2008 2:13:43 AM   
Politesub53


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Joined: 5/7/2007
Status: offline 		CL, I am unsure who Lady E is reffering to in the OP. The only talks I heard about for £1 was a nominal sale to a restructuring firm, Hilco. Hilco would then try and save the company. This deal fell through for whatever reason. Woolworths had started the actual discussions, but wont disclose what the outcome was. The only firm offer i heard was one for £50 million from the Iceland food chain, for part of the company.

As for the £385 million owed. I doubt if its all owed to the banks, there would be a whole list of creditors, including the revenue services. If Woolworths did miss the boat, it was in not taking an offer for well over £800 Million in 2005. How times have changed eh.

http://query.nytimes.com/gst/fullpage.html?res=9F05E6D8113CF93AA25750C0A9639C8B63

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RE: Woolworths and MFI in administration - 11/27/2008 5:41:52 AM   
LadyEllen


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Joined: 6/30/2006
From: Stourport-England
Status: offline 		reported on last night's Channel4 news PS

The Woolies debt was financed by GMAC and another financing company, which in turn were financed by three UK banks, one of them Barclays. The banks wanted out, Woolies couldnt pay, very simple.

No one is allowed to owe money to the folks at HMRC by the way; and one certainly doesnt want to. Late penalty charges plus interest (plus penalties for not paying the interest and interest on the penalties) is the way they work. There is an appeal process but I've never heard of any company having luck with that. If one doesnt pay, the HMRC puts the company in court and so if any of this debt were HMRC liabilities any older than two-three months, Woolies would have gone under a long time ago. Any such older liability would therefore most likely have been met by borrowing, a good time ago.

What Woolies will owe HMRC most likely will be PAYE/NI deductions from its salaries - November salaries having just been paid, the PAYE/NI must be paid by mid December. The last VAT quarter was due in at the end of October, so there will be two months' VAT due for October and November. Since the company doesnt appear to make any profit (although who knows with the "modern" accounting processes that are in such vogue) there shouldnt be any Corporation tax liability.

The £1-00 bid was from a restructuring company; they would pay off around 2/3 of the debt alongside it. But this wasnt good enough for the banks.

E

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