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United Carpets calls in administrators

Date Added: 05/10/2012  

United Carpets (Northern) (UCN) has selected administrators to provide it with business liquidation advice and help it to cope with its debts.

It announced that it had yesterday (October 4th) appointed Lila Thomas and David Acland of Begbies Traynor as joint administrators of the firm.

Immediately afterwards, UCN's business and most of is assets were purchased by United Carpets (Franchisor) (UCF), one of United Carpet Group's wholly-owned subsidiaries and UCN's sole shareholder.

As well as the group's corporate stores, the sale also featured franchise agreements, amounting to an aggregate total of 72 shops.

UCN is the organisation's principal trading firm but a review of the business concluded that unless significant rent reductions occurred, a substantial number of its franchises and corporate stores would no longer be able to operate.

Furthermore, while the group negotiated with landlords to access rent reductions, it was unable to, with UCF now set to communicate with property owners to come to appropriate rents.

If a mutually-beneficial agreement cannot be reached in a store, UCF will therefore close it.

The board of directors at United Carpets confirmed it is disappointed that it has to take this step but claimed it is confident that it will be able to establish a "successful and sustainable business" when the restructure is completed and when overheads are adjusted.

In its trading update of June 2012, the firm indicated that it may need company debt advice in the future, pointing to a "difficult market environment and the outlook for Europe" as some of the reasons for this.

Many of its franchise operations are finding it increasingly hard to satisfactorily run as a result of the "challenging" situation, with trading problems taking place despite the group's "considerable investment" in conversion rate and footfall technologies.

"As a consequence, since the year end it has been necessary to terminate a number of franchises," the trading update stated.

"This is likely to have a detrimental affect on the performance of the Group as it is proving increasingly challenging in the current environment to turnaround failing stores," it added.

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Posted by Michael Beam

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