Mamas & Papas's owners buy back stores in pre-pack

Just days after the collapse of Mothercare, rival chain store Mamas and Papas has been given a new lease of life by administrators Deloitte.

Elias Jahshan writing in the Retail Gazette on November 8, said: “The move sees Mamas & Papas shut down six stores and make 73 staff members redundant with immediate effect, while another 54 head office jobs remain at risk. Private equity firm Bluegem Capital, which has owned the retailer since 2014, has regained control after it bought back Mamas & Papas’ assets via a pre-pack administration deal.

“The pre-pack deal enables Bluegem to cut some of the retailer’s financial liabilities, including six loss-making stores in Aberdeen, Preston, Milton Keynes, Lincoln, Leamington and Fareham. Mamas & Papas said 21 stores remain open but it will continue to review its Huddersfield head office operations.”

The move however is not without concerns. Ian Carrotte of ICSM Credit said: “This deal will raise question marks over pre-packs. Are they a chance for an ailing firm to escape liquidation with the directors speaking to potential administrators about a potential pre-pack as a way to escape debts and refloat the firm in Jasdip Sensi for Accountcy Today said: "‘Big Four’ accountancy firm Deloitte has advised on the pre-pack sale of Mamas and Papas to Bluegem Capital after it entered administration.The nursery company has been sold to the private equity firm, which has owned Mamas and Papas since 2014, and as such has regained control over the business’s assets.The move will see the retailer close six stores, resulting in 73 staff members made redundant with immediate effect, whilst another 54 jobs at its head office remain at risk." 

Louise Laing writing in the Government’s Gazette said there could be a conflict of interest with the administrators. She wrote: “They may be approached by the directors of a company who are already planning a pre-pack deal. While it’s unlikely that the IP will be appointed if they disagree with the proposed approach, before accepting an appointment, the IP requires to be satisfied that they can comply with his statutory duties, and that a pre-pack sale is the most appropriate course of action in the circumstances.”

For Mamas & Papas the chairman of the company Riccardo Cincotta said: “These actions are always difficult but they are also necessary in a challenging market to ensure Mamas & Papas achieves its considerable future potential.

“We remain fully focused on maintaining our position as the UK’s most popular nursery brand. We will continue to review our store portfolio in the light of customers’ changing behaviour and we remain fully committed to an omni-channel offering that reflects their evolving needs.”

The news comes after Mamas & Papas in September appointed advisers from Deloitte to review options for the business as it struggled to remain profitable. Deloitte had also handled a CVA for the retailer in 2014, resulting in Mamas & Papas closing down half of its store estate. BlueGem reportedly invested £20 million into Mamas & Papas when it bought the retailer in 2014. Reuters reported that the deal would shutdown six loss-making stores and see 73 jobs go.

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