Member Article

Mamas & Papas’ landlords approve CVA to save the firm from administration

Huddersfield-based Mamas & Papas’ creditors, including the landlords of 60 UK stores, have approved a Company Voluntary Arrangement (CVA) to safeguard the struggling retailers’ UK arm.

Mamas & Papas, which trades from 63 UK stores, had warned landlords that it was “very likely” it would fall into administration if the CVA was not passed and creditors would only receive a penny in the pound.

The CVA, which was overseen by Deloitte, includes plans to reduce rent on certain stores in the UK retail business.

Mamas & Papas classed 25 stores as “currently unviable”, and demanded a 50% rent reduction from landlords of those shops.

The retailer recorded EBITDA losses of £8.6 million for its year to March 31, 2014.

Founder David Scacchetti secured loans of £9 million last year to enable it to continue trading despite the losses, but when the group breached its banking covenants in March it sought third party investment.

David Scacchetti, chairman of the Huddersfield-headquartered nursery brand, said: “This is an important milestone for us.

“The proposals agreed today not only enable us to cut costs and ensure a profitable retail portfolio but will also create a platform to allow us to continue offering innovative, premium products to customers in the UK and internationally, both in stores and online.

“I would also like to take this opportunity to thank our creditors for their support during this difficult time.

“Alongside the recent investment from BlueGem, the strengthened leadership team and the support of our colleagues, we are confident we are taking the steps necessary to protect the Mamas & Papas brand and help it to achieve its future potential.”

Daniel Butters and Clare Boardman of Deloitte were appointed as nominees to the CVA proposed by Mamas & Papas last month and now become the supervisors.

Butters said: “The vote in favour of the CVAs enables Mamas & Papas to revise lease terms and proceed with its wider restructuring plan; benefiting creditors, members, employees, suppliers and trade partners alike.

“In addition to securing votes from over 75% of all creditors, for a CVA to be approved a company also needs the support of over 50% of unconnected creditors, of which landlords are the largest group for Mamas & Papas.

“I am satisfied that the results of the vote represented the best outcome for all stakeholders and will lead to a greater recovery rate for affected landlords.”

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This was posted in Bdaily's Members' News section by Clare Burnett .