There’s a lot of them
We’ve lost count of the number of times we’ve written and spoken about how administration is a way for businesses to stay trading while working through their difficulties, and that while not every company that enters reemerges stronger on the other side, plenty can and do.
We’ve collected a list of recent administration success stories – businesses that have been through the administration process but have come out stronger, healthier and made some positive headlines.
Champions of England and Scotland
In 2002, Leicester City FC, League Cup Winners only two years previously, went into administration with debts of £30 million.
The collapse of ITV digital, owing them a large amount of guaranteed TV rights money, high player wages and the cost of building a new stadium meant that they were banned from signing any new players for transfer fees during the 2002/03 season.
Eventually the Football League and Premiership decided that this in itself was an insufficient punishment for any club going into administration during the season and introduced a series of points penalties either in the current season or to be implemented in the following campaign for other clubs.
They sold several players for over £4 million and were eventually taken over by a consortium led by ex-Leicester City player and Match of the Day host, Gary Lineker.
They were able to secure promotion back to the Premier League at the end of the year and despite relegation in the interim period, the consortium were bought out by Thai billionaire the late Vichai Srivaddhanaprabha in 2010, who secured promotion once again.
The Foxes then won the English Premier League in 2015/16 and are still contenders now despite the untimely death of their owner in a helicopter crash in 2018.
Glasgow Rangers are one of the most storied football clubs in the world with 55 Scottish League Championships, 33 Scottish Cup wins and 27 Scottish League Cup wins. They also won the European Cup Winners Cup in 1971/72 and have completed the domestic treble on no less than seven occasions.
So it was an earthquake to the Scottish game when the club went into administration in 2012. They were deducted ten points immediately and despite an attempt to arrange a CVA, their debts of £134 million were considered too much to be overcome by their main creditors, HMRC, so the club’s assets and staff were transferred to a new company instead.
Because the new company was also classed as a new football club, the other members of the SPL had to vote on their re-entry into the competition which was rejected, meaning the new club had to rejoin the league pyramid at the fourth level – the second division.
After consecutive promotion campaigns, the new club returned to the SPL in 2016 and this weekend have won their 55th Scottish Championship under the leadership of Steven Gerrard – their first for ten years.
House of Fraser
The 172 year old department store chain entered into a CVA in 2018 following the collapse of a sale to C.Banner – the owner of flagship London toy store Hamleys.
They went into administration in August 2018 for one day before being bought for £90 million cash by the Sports Direct group which also purchased all stores, stock and fittings as well as trademarks and branding.
Sports Direct later renamed their whole group as Frasers Group PLC and plan to redirect the brand into becoming a “next generation of lifestyle stores called Frasers.” The aim of which is to create a “superior shopping experience” which will be led by the groups original Frasers store in Glasgow.
Some other stores will close while they concentrate on fewer and better locations saying “Frasers stores will be positioned at the luxury end of the market and will focus on brands, experiences and services.”
Not every owner has the financial firepower of Mike Ashley but when the Covid-19 lockdown lifts, Frasers will be well positioned to complete their transformation into a high-end retail destination.
Genesis Bakery
McErlain’s – a popular local bakery in Northern Ireland – went into administration in 2018 after falling into financial difficulties despite supplying several of the UK’s major retailers including Marks and Spencer, Waitrose and Tesco.
They were bought in a pre-pack administration deal by the Tayto Group, another locally based company that owns the Golden Wonder and Real Crisps brands, immediately saving 260 jobs and securing the future of the business.
It rebranded as Genesis and has continued to recover and recently announced a new range of high quality cakes and pastries called “The After” in partnership with Stephen Chisholm, the first winner of the Great Irish Bake Off TV show.
None of which would have been possible if the business had been liquidated when it first encountered difficulties.
Chris Horner, Insolvency Director with BusinessRescueExpert said: “The idea of placing your business under the control of an external administrator can be a scary and daunting experience for some directors.
“Their pride might make it difficult to accept the reality of their situation and we’ve heard some stories about owners who would rather close a business with a chance of successful recovery because they couldn’t bear to relinquish control, even for a short period of time.
“It’s unfortunate because administration can be the very act that a company’s future recovery and success is built upon.
“Being able to put the needs of the business first and acknowledge the necessity for professional help is the mark of real leadership – something they’re rarely given enough credit for.”
Next steps
If your business is facing financial difficulties, don’t wait for a miracle – make your own luck and get in touch with us to arrange a free initial consultation.
Once we fully understand your circumstances, we can outline what choices and options you’ve got and how you can best begin your business recovery.
Don’t leave it too late – the quicker you decide to act, the more maneuverability you’ll generally have and the sooner you can begin your own administration success story.