Mamas & Papas is entering into a pre-packed administration which will involve closing six UK stores.

73 staff members are now redundant with a further 54 jobs at risk.

The stores to close are in Aberdeen, Fareham, Leamington, Lincoln, Milton Keynes and Preston, leaving 26 stores and concessions left open.

Mamas & Papas struggles facing nursery retailers

Sales throughout branches are declining. Customers prefer to shop online. Approximately 30% of Mamas and Papas’ turnover is online sales. Competitor, Mothercare’s online store makes up 40% of its UK sales.

A rise in competition has been a significant factor.

A growth in online nursery specialists has reduced the market for the former highstreet guys.”

Mothercare has competition from supermarkets that sell their brands which are now acceptable.

What is a pre-pack administration?

A pre-pack administration is when a sale is agreed, for the purchase of an insolvent company’s business and assets — usually decided before the company goes into a formal insolvency process.

The benefits of putting a distressed company into pre-pack are:

  • It protects more jobs – Possibly some or all employees will transfer to the new company
  • Greater return for secured creditors
  • Protects the value of the company due to quicker process
  • No upfront fees or costs

Pre-pack administrations are usually the best option when:

  • If a company has severe cash flow issues and is unable to pay its creditors
  • A potential buyer for the business exists
  • Likelihood of new purchasers making a success of the company
  • A quorum does not exist to place the company into voluntary liquidation

If you are the director or a shareholder of a company which is having cashflow problems, contact HBG Advisory for free, l advice.

HBG Advisory will work with you to ascertain the best option for you and your company. Options are a pre-pack administration, a Creditors’ Voluntary Liquidation (CVL) or a Company Voluntary Arrangement (CVA).

For further information on Mamas & Papa view: Mamas & Papas website