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Clintons Cards staves off collapse threat as court backs restructuring plan involving 38 store closures

Card chain Clintons is set to close 38 shops in a bid to avoid insolvency, according to reports (Alamy/PA)
Card chain Clintons is set to close 38 shops in a bid to avoid insolvency, according to reports (Alamy/PA)

Clintons Cards appears to be safe from collapse for at least the next 12 months, after an insolvency court approved a restructuring plan that allows the retailer to escape full payment of business rates and rent for 38 shops that are set to close.

The deal saves thousands of jobs that would have been at risk if it was not approved.

Under a plan approved today, the landlords and local councils for 38 unprofitable sites will receive only 8.6p for every pound owed by Clintons, which financial advisors said was currently insolvent. The closure of those 38 shops was first reported by the Times earlier this month.

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Meanwhile its owners, who are also its main creditor, have agreed to provide a revolving loan facility that should be enough to keep the chain alive for the next 12 months.

The ownership group was itself owed £7.7 million, but agreed to cut this total down to £5.3 million - which is the amount that they would receive from administration or liquidation if the business were to collapse - in exchange for more shares. As they were already the sole shareholders, and as shareholders are of lower priority than creditors when a firm is insolvent, the transfer of debt to equity effectively means that the owners agreed to have £2.4 million worth of the funds they injected into the firm pushed down the order of repayment priorities.

According to the restructuring plan, the owners of Clintons - Jeff and Zev Weiss - would only continue to fund the business if it adopted a new business plan that gave it greater hopes of profitability. But with the closure of the 38 loss-making shops and the elimination of much of the rent and rates liabilities associated with these, they now see a path back to profitability.

However, with the loan facility lasting twelve months, if the business is still not profitable by that point it could be at risk of insolvency again.

The restructuring plan was presented by restructuring experts FRP Advisory and law firm Jones Day.

Last year, Clintons was in talks with Paperchase about a merger of  the two struggling retailers. However, the deal ultimately fell through for commercial reasons and Paperchase collapsed into administration.

Jeff and Zev Weiss themselves bought Clintons out of administration after the firm went bust in 2019.