Law360 (March 17, 2020, 11:31 AM EDT) -- U.K. fashion and home décor retailer Laura Ashley said Tuesday it was going into insolvency administration in the face of plummeting sales as the coronavirus pandemic keeps shoppers home.
U.K. retailer Laura Ashley said Tuesday it had been in "advanced talks" for new financing, but under its coronavirus-influenced cash flow it won't be able to get new funds soon enough. (AP)
"The directors of the company, its key trading subsidiary (Laura Ashley Limited), Premier Home Logistics Limited, Laura Ashley Investments Limited and Texplan Manufacturing Limited, have concluded that all available alternative options have been explored and therefore, in order to protect creditors, it is necessary to file a notice of intention to appoint administrators in respect of the company and each of the named subsidiaries," the company said.
Laura Ashley, founded in 1953, operated 155 stores in the U.K. with more than 2,700 employees. It closed 40 stores in 2018 and reported pre-tax losses of £9.8 million ($11.8 million) in its 2019 annual report. According to media reports it secured a £20 million emergency loan in February and was seeking an additional £15 million in financing.
Tuesday's announcement said the company's directors had been "encouraged" by its performance through March 13, which it said was up 24% over the same period last year.
"However, the COVID-19 outbreak has had an immediate and significant impact on trading, and ongoing developments indicate that this will be a sustained national situation," it said.
Laura Ashley said parent company MIU Asia Ltd. had confirmed it would be unable to provide financing in the needed time frame, it said.
"If administrators are appointed in respect of the company, given the group's creditor position, the company is not certain whether there would be any surplus assets available to shareholders of the company," the company said.
It said it had filed notices of intention to appoint as administrators Robert Lewis and Zelf Hussain, who under U.K. law will manage the company and create a restructuring proposal.
--Editing by Rebecca Flanagan.
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