By Neil Craven And Greg Grundy
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Fashion chain All Saints, the darling of the High Street, came perilously close to financial collapse amid two years of legal battles and showdowns with suppliers, an investigation by Financial Mail has revealed.
The look: The season's style showcased this spring in the High Street stores at troubled All Saints
Papers filed with the High Court confirm how chief executive Stephen Craig demanded ‘haircuts’ on debts to suppliers, which he claimed had ‘ripped off’ the company.
They also suggest that All Saints came within weeks of insolvency and was at risk of going into administration, citing conversations with at least two senior executives.
Complaints include one from Scott Reynolds, who made millions of pounds over four years supplying the sewing machines and looms that decorate the shops and windows around the world.
Despite agreeing a deal with All Saints chairman Kevin Stanford, who made his fortune selling his stake in the Karen Millen brand to Icelandic financiers, Reynolds says his firm, Unique Finds, is still owed money dating back to 2010.
Evidence that All Saints was suffering financially emerged as early as November that year when one supplier was allegedly told the retailer could not pay its bills in full, the documents say.
Then in December, Craig said the company had suffered a poor Christmas when sales for the month reached less than half what he had been expecting.
The company had also been squeezed by the escalating cost of its expansion in America, which reached £43 million, almost double the original projected cost, court documents filed by All Saints supplier RTS Contracts allege.
RTS, via subcontractors, had organised work on stores in Moscow, Berlin and Chicago among others. But it alleges that by December 20, 2010, bills owed had risen to £9.7million, at which point Craig demanded a reduction.
He said in an email that a ‘haircut’ â€" a reduction in bills charged by subcontractors â€" was ‘not a choice’. According to the court papers, Craig wrote to RTS, referring to its subcontractors: ‘We are telling them 500k each. They’ve ripped us off. Need 2m [million pounds], simple as that. Not your issue. Tell them to dig deep [or] they will get zero.’
In a meeting two days later with Craig and Peter Wood, who replaced him as chief executive last September, RTS heard that there was a ‘real risk that [All Saints] would be insolvent by January 2011 due to poor cash revenues’ and it must ‘produce a realistic payment plan for consideration’.
The money owed relates to a discount agreed by RTS after warnings that All Saints would otherwise go bust.
On the brink: Papers suggest that All Saints came within weeks of insolvency
In March last year, Financial Mail reported that the company had received a £1.4million claim from debt agency Bibby Factors on behalf of KG Maintenance Services amid rumours that KG was not alone.
Two months later, the company announced a refinancing deal with investors, including Lion Capital and Goode Partners. Lion Capital has since been working to reorganise the company’s finance and management.
However, two claims were filed this month for a total of £1.8million by RTS and Unique Finds. It has also emerged that Goode Partners quietly sold its 11 per cent stake in the business in March.
Stanford remains chairman but is not thought to have been actively involved in the business since last year. Lion Capital, All Saints and Clyde Co, the lawyers acting on behalf of RTS and Unique Finds, were not available for comment at the weekend. Attempts to contact Stephen Craig were not successful.
All Saints accounts show that in the year to January 2011, sales increased 57 per cent from £133million to £209million.
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