The collapse of Cath Kidston has left unsecured creditors facing a hefty bill of around £90 million. In a pre-pack deal last month, the brand parts of Cath Kidston were sold back to its parent company, Baring Private Equity Asia. However, the deal did not include the brand’s physical stores, leaving unsecured creditors, including landlords, in a vulnerable position with only a small payment expected from the sale.
The rescue deal, facilitated by administrators at Alvarez & Marsal and management, resulted in the loss of over 900 jobs, with only 32 roles being retained in the UK. Alvarez & Marsal acknowledged that Cath Kidston’s already existing challenges, such as high rents and changing consumer behavior, were further exacerbated by the impact of Covid-19.
Although Cath Kidston will continue to operate online and through overseas franchises, records filed at Companies House highlight the difficult situation for unsecured creditors. With approximately £90 million owed to them, their claims could potentially rise significantly following the surrender of the retail stores to the landlords. Notable unsecured creditors include trade creditors, landlords, and HM Revenue & Customs.
The exclusion of Cath Kidston’s store portfolio from the sale is seen as yet another blow to the struggling UK high street. As the lockdown restrictions loosen, numerous brands are anticipated to downsize their store estates. Oasis and Warehouse have already taken the decision to permanently close all their shops. The impacts of the pandemic have accelerated the challenges faced by retailers, leaving unsecured creditors, like Cath Kidston, grappling with the financial consequences.