Landlords revolt over Peacocks owner’s restructuring

Landlords of a property syndicate have set out to reclaim the keys to their Edinburgh Woollen Mill stores, as they hit back against the retailer’s preparations for administration after months of refusing to pay rent. EWM Group is owned by billionaire Philip Day and operates 1,100 stores and concessions under its brands, which include Peacocks, Jaeger, its namesake EWM and Ponden Home, the majority of which have not opened since the lockdown began. It has filed a notice of intention to appoint FRP Advisory as its administrator, and outlined plans to close 50 stores this week as well as up to 150 in the space of a fortnight. The process is thought not to include Bonmarché, which Day bought out of administration last year. At the time, EWM chief executive Steve Simpson said normal trading had been made “impossible” as a result of the pandemic, on top of a “series of false rumours” about payments and trading that have affected the firm’s credit insurance. But Anthony Ratcliffe, partner at commercial property syndicate Ratcliffes, has blasted these as “shabby manoeuvres” from the company and criticised Day, who resides in Switzerland and whose acquisition vehicle Spectre is registered in Dubai. In a letter written to Simpson – dated 14 October and seen by EG – Ratcliffe “totally rejected” the retailer’s restructuring on behalf of the landlords at four stores: two EWM locations, a Bonmarché shop and a Peacocks store. Ratcliffe accused the retailer of refusing to engage with landlords and suppliers and “withholding payments to those parties, and in particular the March, June and September [quarterly] rents, together with insurance premia and service charges”. He said in the letter that “massive overhead savings will have been made” as a consequence of these, with “not a penny paid to your landlords on your 1,000-plus branch network for that nine-month period”. During the six months to March 2019, EWM posted a pretax profit of £32.2m along with group revenue of £296.7m. “My clients consider that, if your hitherto very successful company is to be saved, with its stores and employees retained, the person best placed and most responsible to do that is its non-resident billionaire owner, Philip Day, by repatriating some of his tax-sheltered profits,” said Ratcliffe in the letter. He added that other fashion retailers have negotiated fair rent arrangements with their landlords, including Seasalt, The White Company, White Stuff and Yours Clothing. As a concession during the crisis, Ratcliffes has offered its tenants the option of paying monthly in advance. “After robbing your landlords of nine months’ rent, insurance premia and service charges, you now have the temerity to ask for their ‘co-operation’, while you prepare a [company restructuring], thereby ensuring that your suppliers and landlords will have no effective legal recourse to a company of substance and frustrating a court process to obtain payment of monies and rent arrears owed,” Ratcliffe stated. “Kindly arrange for the shop keys, together with the alarm keys, details and codes, to be sent by recorded delivery to our offices forthwith.” The letter was written as feedback to a 14 October deadline for landlord responses set by EWM, which Ratcliffe received on Monday 12 October. In that document, also seen by EG, Simpson sought confirmation from landlords that they would not claim for lease liabilities during the administration process, in a rent-free period that would only end 28 days after a termination notice from the property owner, if they chose to send one. Those lease liabilities would accrue as an unsecured claim. It said the alternative was to forfeit or surrender the lease, resulting in redundancies at each property in question. The document also highlighted that “several parties” are interested in buying the business, including “the option of [a vehicle] controlled by some of the existing directors”. “There is an unprecedented unanimity of views from landlords to reject EWM’s proposals,” said another landlord, who did not wish to be named. A spokeswoman for EWM Group said: “Throughout this extremely tough time we have worked to be fair to our staff and all our partners, including landlords. But the pandemic and the lockdown have forced all retailers to make difficult decisions and EWM Group is no exception. “Our priority remains securing the survival of our businesses and saving as many jobs as possible.”   To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette Photo by Maureen McLean/Shutterstock (10658877fj)