Failed card group to pay no rent until 2009
Kroll, administrator to 200-store Celebrations Group, writes to landlords
A card shop retailer that went into administration this month has written to landlords to say it will not pay rent until at least January.
Kroll, the administrator to failed card shop chain Celebrations Group, has written to more than 200 landlords saying it will not pay rent until January, despite all 288 stores trading as going concerns.
The letter asks landlords to allow Celebrations to ‘occupy as a licensee until January 2009’, and says rent will not be paid until it finds a buyer for the stores. If it does not find a buyer it will send the keys back to landlords in January.
Landlords will be wary of agreeing to Kroll’s terms. It is likely landlords will be forced to let the business trade without paying rent but without signing up to its demands.
But if a buyer is found for some of the stores the unpaid rent liabilities will fall to the new buyer. If a buyer is not found, stores will be returned to landlords.
A Kroll spokeswoman said:
‘There are more than 200 landlords in the Celebrations Group property portfolio and we are in correspondence with all of them concerning obtaining a stable platform to enable the administrators to achieve their aim of a going concern sale.’
It is thought Kroll expects to know which stores it will be able to sell within the next eight weeks.
Celebrations was previously called Greeting Card Group and traded from 470 Card Warehouse and Cardfair stores, but went into administration in January 2006 with debts of £30m. Celebrations bought the 288 Card Warehouse and Cardfair stores from administrator PricewaterhouseCoopers in 2006.
However, tough trading conditions brought it down again again last month. Kroll said ‘having experienced challenging trading conditions and ever-increasing competition within the retail industry’, it had failed because of cashflow difficulties.
Catherine Lambert, national director of shopping centre management at Jones Lang LaSalle, said: ‘If a retailer in administration is not paying rent, due to the change in legislation on empty rates relief, landlords may well choose to accept no rent, as long as the unit is occupied and trading.
‘Otherwise, unless the unit can easily be relet, the landlord would be faced with empty rates tax and service charge as well as no rent coming in on the empty unit.
A vacant unit could also be vulnerable to squatters, especially during Christmas trading season.’