The Independent has reported that MFI put its retail and property divisions into administration yesterday, following the completion of a management buyout deal that rescued 106 of its 187 stores. Kroll, the restructuring specialist, was appointed administrator to oversee the process.
The buyout was led by MFI’s chief executive Gary Favell which secured 1,350 jobs under the new company, MFI Group. The joint administrators will consider a range of options for the 81 stores, but 39 employees were made redundant.
It was stressed that MFI will continue to trade as usual and all existing customer orders from all stores will be honoured.
Fraser Gray from Kroll, said: “The completion of a management buyout prior to our appointment as Administrators means that a substantial part of MFI has already been saved.”
Mr Gray said that, “Despite the turbulent trading conditions in the retail sector, we are currently in discussions with a number of potential purchasers ““ including the management buyout team – for the Companies’ head office, distribution centre and remaining stores.”
MFI had already filed a notice of intention to put the property company controlling the store leases into administration. It is understood the liability for 46 leases could revert back to Galiform, the kitchen maker that sold MFI to Merchant Private Equity for a nominal £1 two years ago.
There also now appears to be a problem with MFI’s suppliers obtaining credit insurance to cover any credit offered to MFI which has, we’re told, led to certain suppliers refusing to supply the group. Three sources have now stated that this is the case.
Whether or not this will have an impact on customer orders is, as yet, unclear. It has to be noted however that this is a very fluid situation as things currently stand with various reports, both accurate and rumoured, filtering in as they happen.
UPDATE
Property Week reports the following:
More than half of MFI’s stores are to be saved after the company went into administration yesterday.
A management team, led by MFI’s chief executive Gary Favell, has bought 106 stores for the new company MFI Group and is in negotitions to buy further stores of the 190-strong kitchen retail chain.
The “˜pre-pack’ deal was agreed with administrator Kroll yesterday.
The management, as revealed by Property Week last month, has been in emergency talks with landlords to plea for three months rent free for its stores.
Many landlords have agreed to the proposals hoping that a rent-free period will enable many of the stores to survive into next year.
It is thought there is up to 25 further stores that MFI Group is hoping to also save if it can agree longer rent free periods than three months and it is still in negotiations with landlords for these stores.
It is thought that the liability for 46 MFI leases could revert back to Galiform, which sold MFI to Merchant Private Equity two years ago.
It is thought more than 20 of these stores may not be saved by the MFI Group and may revert back to Galiform.
Fraser Gray, a partner at Kroll said: ‘The completion of a management buyout prior to our appointment as administrators means that a substantial part of MFI has already been saved.
‘Despite the turbulent trading conditions in the retail sector, we are currently in discussions with a number of potential purchasers ““ including the management buyout team – for the companies’ head office, distribution centre and remaining stores.
‘In the interim, MFI will continue to trade as usual and all existing customer orders from all stores will be honoured.