Monday, September 10, 2018

No Real Winners as Logistics Firm Exercises a Lien on House of Fraser Stock  

Union Continues to Complain About All Involved

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Shipping News Feature UK – The inevitable row following the collapse of the House of Fraser (HoF) retail chain continues unabated. In a piece last month which detailed the sorry tale, the GMB union lambasted Sports Direct boss Mike Ashley when the minority shareholder purchased the assets of the business for £90 million, without taking responsibility for the previous owners debts. The deal followed an unsuccessful attempt by the majority shareholder, a subsidiary of Chinese retail giant Sanpower to sell off part of the HoF business to another Chinese group prior to the liquidation. The situation has left XPO Logistics with over £30 million unpaid for warehousing and transport services.

XPO has also come under fire from the union, presumably for allowing a debt of this magnitude to run up, despite all the signs that HoF were in trouble. Now XPO are sitting on stock which belongs to Sports Direct, doubtless exercising a lien for unpaid bills. This conflict is the target for the latest union rant as the expected news of redundancies were announced with some 300 jobs to go at XPO’s Milton Keynes facility when it closes on November 27. Alan Costello, GMB Organiser, said:

“GMB is disappointed by the fact that XPO and Sports Direct are clearly only interested in the stock in the warehouse. They couldn’t care less about our members or their livelihoods. This whole stand-off, during which our members have been left in limbo, has been about commodities, not people. Our members have been left by the wayside, while XPO and Sport Direct fight like rabid dogs over the bones of House of Fraser.”

What the GMB have not said is the Sports Direct have already delayed the closure of 6 HoF stores due to happen in January 2019 whilst Mike Ashley considers his options and decides on a management plan. Had Ashley not bid for HoF he presumably would have sacrificed his 11+% share in the group and had to settle for the terms agreed elsewhere, presumably as a non-preferential creditor, making the acquisition common sense.

The case has once again brought the question of ‘pre-pack’ sales of failed companies starkly into focus with the only true profiteers the administrators handling the liquidation, and are, always, preferential creditors.

The case between XPO and Sports Direct will be interesting as, when this type of situation arises, the advantage normally lies with the current stockholder i.e. XPO Logistics. This case however is a particularly big one and, although the precise value of stock retained by the freight outfit is unknown, it will surely be enough for the new owners to try and challenge what is after all, a classic case of lien on goods.

In the continuing argument Sports Direct called XPO ‘blackmailers’ and said the company was being held to ransom. For its part it was the retention of stock by XPO which was due for delivery, after the non-payment of the account by HOF, which ignited the whole sorry process. Now the GMB and the disenfranchised work force must hope for a goodwill payment from Ashley or XPO, both seemingly unlikely, as the administrators have indicated that the Sports Direct money will principally be taken by banks, bond holders and of course bean counters.

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