Can the bank sell our debt without our agreement, and what can happen if it does?

Many different types of loan facility come with the risk that the debt can be sold on, explains David Hewish, a managing director in AlixPartners’ London office.

With many banks looking to de-risk their balance sheets at the moment this is a potential action that retailers must be prepared for.

Hewish advises that though the terms of a debt facility will remain the same if it is sold on, a new lender may have different goals; particularly if they have bought the debt at a discount and are not a traditional lender.

It is important to be proactive, and not be pushed into short-term actions to save a little cash says Hewish: “If a retailer is going through a tough spot they must retain the initiative, getting all the stakeholders on board including lenders, and demonstrate a viable way of delivering value to them.”

He adds that the investors buying portfolios of bank loans are likely to have additional funds that a retailer can access if they can show a plausible business case. At the very least, retailers need to give a new lender a compelling reason to remain patient while they execute a turnaround or business transformation project.

He concludes: “Retailers don’t have a viable business plan unless they can adequately fund it. Too many businesses are limping along without addressing their under­lying issues.

“Anyone who ignores this opportunity to set the agenda does so at their own peril.”