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Anger at Clintons' £13.5 million profit from phoenix administration

Landlords have responded angrily to the news that Clinton Cards made a £13.5 million profit buying back Birthdays after closing unprofitable stores just a month ago.

The figures came to light in Clintons’ annual results on Friday which showed the discounted price at which Clinton was able to repurchase the company after putting Birthdays into administration at the expense of landlords.

The British Property Federation, which represents landlords, investors and surveyors, said it was a perfect example of a phoenix administrations, where a firm is put into administration to avoid losses and get out of contracts before the profitable portion is bought back.

Liz Peace, chief executive of the British Property Federation, said:

“This underlines why many landlords feel aggrieved by the insolvency process and why so many retailers are also up in arms at their competitors getting what they see as subsidies. Rent is such a small portion of a firm’s outlay that if they can’t afford it, there are truly serious problems.

“The issue is that insolvencies like this are a charter for failing business to walk away from legally binding contracts without paying a penny, while everyone else – like the 750 people who lost their jobs - has to accept the consequences of bad business decisions.

“No one is against being flexible, but when firms claim hardship and then buy themselves back saving millions of pounds or start expanding again with rights issues and new stores, the likelihood is that landlords will stand firm for the sake of not wanting to annoy the rest of their customers.”

Clinton, which has struggled in the face of online and supermarket competition, placed Birthdays into administration in May and repurchased 196 of the 323 stores a month later, with the loss of 750 jobs.

The one-off gain was booked on the income sheet in line with international accounting rules. The £13.5 million exceptional profit was the difference between the “fair value” of the assets Clinton bought from the administrators and the £2 million to £2.5 million it paid.

For more information and all PR and media queries, please contact Andrew Teacher, Head of Media, on 020 7802 0113 / ateacher@bpf.org.uk.