Davies has said that he and his investors will not be able to secure funding in time for a rapid sale of the business, expected by the end of this week.
Following the collapse of parent company Mosaic in to a pre-pack administration on Monday, Deloitte needs to seal the business’ future either way as soon as possible to get the best deal for its creditors.
Davies told Retail Week that he was “still talking” to Deloitte but if the administrator was pushing for a quick sale he will be “unlikely to get it”.
Davies’ inability to work to the timescale thought to be in place leaves the way clear for Debenhams to pounce. The department store chain – which has Principles concessions in its 150-plus stores in the UK and Ireland – is understood to be the only other interested party to have made a formal offer for Principles at this stage.
Although Debenhams' offer is likely to be for more money than Davies’ proposal, it is also believed to be solely for the brand and not the standalone stores. If Debenhams wins the battle, there could be up to 2,500 staff casualties and 90 standalone stores could close. No retailer wants to see any more shuttered shops on the high street.
So Davies' proposal is likely to have a number of industry supporters, including the management of the newly formed Aurora fashion group, which acquired back the core Mosaic brands from the administrators.
However undignified the manner of a pre-pack administration and a debt-for-equity swap with management and Icelandic bank Kaupthing may be for Aurora, industry consensus is that the often contentious process has, so far, been successful.
What is certain is that Principles and Shoe Studio did not fit in to the collection of womenswear brands that the now defunct Mosaic had collected. A break up had always been on the cards, even if the ultimate route to that break up became messy thanks to the collapse of backer Baugur and the Icelandic banking system.
Aurora’s management insist that, within legal frameworks, they will pay back the suppliers that have worked with them over the turbulent past few months.
The management – headed by chief executive Derek Lovelock and deputy Mike Shearwood - has also worked with the administrators, who control the future of the two brands not acquired by Aurora, to secure as many jobs as possible at the brands.
The sale of Shoe Studio out of administration yesterday to rival Dune has safeguarded more than 1,500 jobs.
This seems to be an example of a pre-pack adminstration doing what it was created to do.