Tenants, Landlords and a girl’s best friend.
15 July 2020: A successful negotiation with a company landlord was achieved by our Milton Keynes office during the lockdown period. The tenant business assisted was a jewellers based in London.
Now, whoever said diamonds are a girl’s best friend clearly never owned a dog. Nevertheless, jewellery and the sale thereof remains a significant part of our retail economy with sales approaching £6billion in 2019. However, as with most retail industries the on-line offering has led to a change in consumer behaviour. This coupled with the covid-19 pandemic has, inevitably, led to some cash flow issues for jewellery retail businesses.
The BRI Milton Keynes office were recently contacted by a jewellers with rental obligations that couldn’t be met. The company were tied into a five year lease which still had two years to run. The future rent and service charges represented a total liability of over £200k.
Without the means to invest further funds the director saw no solution other than liquidation. Thankfully, our Milton Keynes team felt differently. Having reviewed the company’s position and the fact that the landlord represented by far the majority creditor, it became apparent that if a resolution with the landlord could be achieved then insolvency could be avoided.
Despite a relatively hostile relationship between the director and landlord having developed, as an independent third party BRI were able to begin negotiations regarding the rent position. Initial offers were rejected by the landlord and again the director saw no resolution other than liquidation. However, (to paraphrase) it’s not that we’re so smart but that we stay with problems longer. A second round of negotiations led to the landlord agreeing to an informal surrender of the lease with no future rent payable.
Having removed the rental burden, the company will now be able to continue to trade via ecommerce. Although not entirely out of the woods, current assets should enable all other liabilities to be met. The company not entering liquidation also helps the director in saving the need to write off a significant sum invested in the business. It is hoped these funds can now be recovered from successful future trade.
If you or your clients are currently experiencing any difficulties with rental obligations, do not give up hope, instead please contact BRI and we will assist in considering all of the potential options open to you. Please be assured here at BRI we will always provide the right advice, first time every time, regardless of the fee outcome to us.