Jewellers owed creditors £2m
High street chains HPJ the Jewellers and Jewel Nation, based in Stoke-on-Trent, owed unsecured creditors more than £2m when their holding company was placed into administration, a new report has revealed.
The businesses were owned by Congleton-based HPJ Retailing.
HPJ Retailing, now known as FJ Sub Realisations, had 450 employees and traded from 78 stores under the two brands. The £24m-turnover business was acquired by investment and restructuring firm Gordon Brothers in February 2011 in a deal that safeguarded 308 jobs.
The report, prepared by administrators at KPMG, shows that Gemstone Acquisitions (2011), owned by Gordon Brothers, first purchased HPJ Retailing’s parent FJ Realisations from US owner Ambervale in December 2010.
But following a review of its operations, KPMG said it became “apparent that significant additional funding would be required to fund projected losses and build working capital in 2011”.
It added that the sale to Gemstone Acquisitions was a distressed one “with limited time for due diligence around the medium/long-term prospects for the trading business” and therefore meant that Gemstone Acquisitions was unable to inject any cash into the group without a “fundamental restructure”.
KPMG said it conducted a thorough sale process prior to the administration – which resulted in 63 expressions of interest – but the successful offer was received from Gemstone Operations and Gemstone Retail, both special purpose vehicles established by Gemstone Acquisitions, and ultimately Gordon Brothers.
The deal resulted in 52 out of 78 shops being bought by the investment and restructuring firm, but the rest closed with more than 150 redundancies. Gordon Brothers paid £1.49m for the assets, with £1.36m deferred until November.
Speaking at the time of the sale Paul Flint, joint administrator at KPMG, said: “In this challenging climate we are pleased to have agreed a sale of this long-established retailer which secures the jobs of the majority of the workforce and enables the business to continue trading from a number of high streets and shopping centres across the UK.”
The report shows that unsecured creditors are owed £2.2m as a result of the administration, with HM Revenue & Customs accounting for more than £300,000 of the total. KPMG said it anticipated that “realisations will be insufficient to enable a distribution to unsecured creditors”.
HPJ Retailing’s parent FJ Realisations also holds a debenture over the fixed and floating assets of the company worth £11.5m and it is not expected there will be sufficient realisations to satisfy the secured lending.
