Now filing for administration is considered a clever move to improve your lot, especially in the case of the pre-pack deal.
Nowhere is this truer than in property. You only have to look at MFI's first collapse last year to see how a pre-pack administration is used as a way of offloading the weaker sites in a portfolio.
Rather than being a desperate last resort, pre-packs are exploited as a way of slimming down an inefficient and bloated set of stores in one quick, easy move.
So it’s no surprise that the practice is universally unpopular among retail property. Landlords, agents and retailers – apart from those using it at the moment – are united in their distaste for its use.
For those who don’t understand the ins and outs, Christmas must have been confusing. One day you’re reading that USC, Whittard and Officers Club have bitten the dust, the next the foundering retailers are back on track.
One property agent I spoke to this week summed up the feelings of the many by saying that the practice “seems completely outside of the whole basis of the contract of property.”
Property loses its value if it can be dispensed of so easily and for other retailers it is a bitter pill to swallow to know that rivals are having such an easy time getting rid of their weak stores – something all retailers would like to do – because the system allows such a soft bailout.
There will always be those who exploit a system if they are allowed to. If any accountability is going to be restored what needs to change now is a serious shake-up of the legislation governing administration.
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