ABOUT 1,000 jobs – including ones in Huddersfield – are at risk after the owner of troubled fashion chain Bay Trading said it would place the business into administration.
Parent group Alexon has applied to appoint Deloitte as administrators at the 268-strong chain, which includes a store at New Street in Huddersfield town centre.
Retailers including Woolworths, Principles, Adams, Zavvi and Priceless Shoes have already disappeared from the New Street shopping scene.
The move comes after insurers withdrew crucial trade credit cover following news of Bay Trading’s difficulties earlier this week.
Alexon said Euler Hermes had pulled trade credit insurance – used to cover firms against the risk that they would not be paid for goods supplied – after results showed a “material uncertainty” over the future of Bay Trading.
Administrators hope to continue trading Bay Trading – part of a subsidiary called Epcoscan that is run separately from Alexon – until a buyer can be found.
Alexon, which includes brands such as Ann Harvey, Minuet and Kaliko, stressed the rest of the business was still profitable and not going into administration.
Alexon had hoped to revive Bay Trading’s fortunes by revamping stores, installing a new design team and introducing fresh product lines.
But it warned in full-year results this week that it might need to radically overhaul the loss-making business so that it remains within banking facilities if performance failed to improve.
The removal of trade credit cover came as a final blow for Bay Trading and Alexon said the business was now too much of a “financial drain”.
Jane McNally, chief executive of Alexon, said: “It’s with deep sadness that we’ve reached the position we’re in today. Everyone at Bay Trading has worked very hard to try and turn it around and I’d like to thank all those who have been involved.
“Today’s decision, although incredibly difficult for us to make, does provide certainty for the group.
“Our remaining core Alexon brands have a strong heritage and I firmly believe there is an exciting opportunity for them.”
Trade credit insurance has become a major problem for companies in the recession – with many firms hit as insurers have hiked premiums or withdrawn from high-risk markets such as retail altogether.
A decision by insurers to pull cover from suppliers to Woolworths hastened the demise of the high street chain at the end of last year.
Bay Trading made underlying losses of £7.2m in the year to January 31, compared with profits of £1.1m a year earlier. The wider Alexon business made underlying operating profits of £10.1m in the year, but posted bottom-line losses of £27.7m.