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Rescue of distressed retailers in the new environment: a users' guide

The pandemic has massively accelerated changes in the retail market.The shift of consumer preferences from shops made of bricks to those powered by clicks; the gravitation to major...

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Date: 11/02/2021

Authors:

Jeremy whiteson colour 2017

Jeremy Whiteson

Partner

The pandemic has massively accelerated changes in the retail market.

The shift of consumer preferences from shops made of bricks to those powered by clicks; the gravitation to major brands with global presence; and the competitive drive for cost reduction were all spreading disruption when the pandemic hit.

Then the widespread and extended closure of much of the high street hit- and the disruption became turmoil. A number of well known names have entered administration over the last year- Debenhams, Arcadia group, Monsoon, Warehouse, Oasis, Jaeger, Peacocks, TM Lewin… and the list goes on.

It will take a while for the full picture to emerge but we are seeing the outline of some elements of the route forward.

Many of these businesses have popular brands which have been bought from the administrators. However, often the new owners see the brand as an online only channel. In many cases no (or a reduced number of) physical shops are acquired with the value and emphasis on a website or in sales of branded goods through other retailers.

This raises a number of legal issues for incumbent management and buyers:

  • Is the brand protected by adequate registrations at trade mark registries?
  • Is the administrator able to sell these to the buyer?
  • Which employees will the buyer inherit under the TUPE regulations (and can a deal be structured to take some but not all staff)?
  • Will the buyer be able to acquire franchise, brand licensing, and store concessions which many brands rely on?
  • Will title to stock pass or be retained by suppliers under retention of title arrangements?
  • what about security equipment, tills and customer payment mechanisms owned by lessors or other third parties? and
  • if the buyer wants to take leasehold properties but with lower rents how can they structure this?

In our series of articles over coming weeks our panel of experts will give their thoughts on the way through this labyrinth.

Please share with us any thoughts, experiences or questions.

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