In Focus: Not such a soft landing
Sam Metcalf highlights the plight of those manufacturers hit by the recent high street insolvencies.
Much has been written about the knock-on effect of Bombardier’s slow demise in Derby, but the recent mini-meltdown on the high street is hardly good news for the region, either.
In the last few weeks, womenswear retailer Jane Norman, Habitat, Moben Kitchens and Dolphin Bathrooms have all had to call in our friends the administrators, and local professional services experts are warning that this could mean hard times ahead for the local supply chain.
Mark Wood, specialist restructuring lawyer at Eversheds in Nottingham, told me: "The news of the demise of these bastions of the high street is troubling in itself, however the ramifications for small businesses and their suppliers is equally as worrying.
"The effects upon supply chain businesses that stand behind such large retailers will no doubt have wider effects in the sector itself and will hit their own revenues extremely hard."
Wood thinks that in some circumstances - and without the right protection - these high-end insolvencies can often cause further terminal positions further down the supply chain.
He says local suppliers need to act quickly and do what they can to identify and recover any items supplied "pursuant to their own retention of title clauses within those terms and conditions agreed with their buyers". That’s legalese for getting your stuff back before its sold off with the rest of the kit, I believe.
A number of high profile retail insolvencies have occurred this last month after the companies were unable to pay their quarterly rent charges, plunging them into administration and having significant knock-on effect to small firms throughout the sector.
Wood, who is head of restructuring for Eversheds in the East Midlands, said the key was for suppliers to act quickly and use their professional advisors to assist them recover what value they do hold in the supply chain.
"Many small suppliers that haven’t protected themselves with robust terms and conditions with their end customers are at risk, especially if their revenue streams are not diversified enough to cope with any one major customer insolvency," he added.
We see this often in the heavy manufacturing industries, and big news is made about it. What we don’t often hear is the softer side of manufacturing that suffers when a big chain goes down. Time to start banging the drum, perhaps.
Any comments? Sam Metcalf, Insider
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