IPA exclusive industry update from Insolvency Insider
IPA Insolvency Practitioner newsletter, August 2024
A specially curated selection of the top stories for IPA members from Insolvency Insider Editor, Dina Kovacevic. More information on all the stories and the link to subscribe to the newsletter is here.
Selina Hospitality (NASDAQ:SLNA), a London-based global hospitality brand built to address the needs of millennial and Gen Z travellers, entered administration on 22 July. The company has a portfolio of over 100 properties across more than 20 countries. It was valued at $1.2 billion at the time it went public on NASDAQ in 2022, but its market cap has since plummeted to $13.08 million and the company is being delisted from the stock exchange. Andrew Johnson, Samuel Ballinger and Ali Khaki of FTI Consulting were appointed joint administrators and said that Selina was unable to reach its growth aspirations following the Covid-19 pandemic and subsequently struggled to raise sufficient capital to deliver a turnaround due in a large part to increased interest rates and weaker trading performance. The joint administrators are trading the business while they assess options.
Carpetright, the UK’s largest retailer of carpets and flooring, entered administration on 22 July after facing challenging trading conditions predominantly due to changing consumer preferences and a drop in home improvement spending post-pandemic. Immediately on their appointment as joint administrators, Zelf Hussain, Rachael Wilkinson and Peter Dickens of PwC completed a pre-pack sale of the Carpetright brand, intellectual property, 54 stores and two warehouses to rival Tapi Carpets, saving 300 jobs. Unfortunately, 211 stores were not sold and will be closed, leaving 1,000 employees facing redundancy. The Royal Bank of Scotland, NatWest Markets and Nestware Holdings have registered charges against the company.
Morphe Cosmetics Limited, a UK-based online and retail cosmetics darling, has been successfully sold to Forma Brands UK via a pre-pack sale. The company offered wholesale distribution of its products and also sold directly to consumers online and via its eight retail stores (seven in the UK and one in Holland). Unfortunately, tough market conditions and disproportionately high rent obligations made the existing network unviable. Following the appointment on 31 July of Mark Blackman and Benjamin Wiles of Kroll as joint administrators, they confirmed the sale of the online and wholesale parts of the business. The eight stores have been shut with immediate effect and the parent company, Forma Brands LLC, has confirmed that all impacted staff will receive an enhanced redundancy package. The joint administrators were supported by Sarah Teal and Louise Snipe of Shoosmiths.
Recent articles
Radford Goodman and Nick Payne of Mishcon de Reya explain why recent legal scrutiny of restructuring plans, particularly following the AGPS BondCo case, highlights evolving judicial attitudes towards creditor engagement and the potential tightening of the “fairness” test, signalling that courts may impose stricter requirements on companies seeking to implement such plans in the future.
Bruce Bell and Tim Bennett of Latham & Watkins explain why, despite three recent landmark UK restructuring plan decisions, uncertainty remains around the value, if any, a plan company should offer dissenting creditors as the “deliverability price” of a plan.
The team at Morgan Lewis summarises a recent case in which the High Court considered whether UK trustees in bankruptcy might breach sanctions by allowing Russian creditors to participate in UK insolvency proceedings.
Please note that guest content does not necessarily represent the views of the IPA.