Private equity firm Modella Capital has demanded rent holidays until after Christmas from the landlords of the stores it acquired as part of its £3.6m deal to save the struggling retailer, Retail Week understands.
Two sources with understanding of the ongoing discussions between Claire’s new owner and its landlords said that the private equity firm is demanding the 156 stores trade rent free until after the crucial Christmas period, after which time Modella will then look to agree new deals with landlords in the New Year.
“The line to landlords from Modella at the moment is that they’re looking to trade them rent free, predominantly until Christmas, to help see them through”, said one source.
The source also said that the landlords of the remaining 145 stores, which were not part of the acquisition but remain open and trading, are also being asked for rent holidays, or else face Claire’s pulling out of the remaining leases and shutting the stores down within eight weeks.
Retail Week also understands that the retailer is conducting closing Sales in the 145 unwanted stores, in a bid to liquidate remaining stock.
The proceeds made from liquidating the stock will then come into the administration estate, and would then be distributed to creditors.
A spokesman for Modella Capital said the firm wouldn’t comment on the details of its discussions with landlords.
The news comes after new documents were filed at Companies House on Monday (October 6), which showed that Modella Capital acquired Claire’s for just £3.6m, of which £1.4m has been put back into the retailer to help pay off its debts.
Unsecured creditors to the business, which include suppliers and landlords, were owed over £11m at the time the retailer collapsed into administration, and this figure is expected to rise as new claimants come forward.
According to the documents, total assets available to unsecured creditors come to about £8m. A spokesperson for Claire’s administrators Interpath said it expected to pay back at least some of the money owed, although exact amounts had not yet been determined.
Secured preferential creditors, and secondary preferential creditors, like HM Revenue & Customs, will expect to be paid back in full.
Claire’s collapsed into administration in the UK on August 13, shortly after its US parent company applied for Chapter 11 bankruptcy.
Private equity firm Ames Watson acquired the retailer’s North American and Canadian businesses in September, and Modella Capital agreed a separate deal with the firm for the rights to use the brand name in the UK and Ireland, alongside completing its rescue deal.
The retailer had made losses of £25m over the last three years of operation, and its most recent set of financial accounts showed it had made a £4.7m loss in the year to March 2024, with revenues of £137m.
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