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article imageTroubled photography chain, Jessops, calls in administrators

By Eileen Kersey     Jan 9, 2013 in Business
Businesses come and go, fact. It does not take an economic downturn for a business to fail. In the UK the poor economic climate has, however, resulted in many firms 'going to the wall'. The latest is Jessops.
Jessops is a well known name in the UK. Once the specialist photography shop where professionals, hobbyists, and would be photogrpahic geniuses chose to buy all 'things photography'. The company's reputation grew, as did their customer base. Never a cheap shop, Jessop's stores did sometimes offer bargains, but it was more about quality than cost. Knowledgeable staff were always happy to go the extra mile but the digital age changed the outlook for Jessops.
The news that the 75-year-old company has called in the administrators, broke early today. Other companies in the UK that had to take this step during the last year include JJB Sports, La Senza, Clinton Cards and Comet.
As the day has progressed the latest report from SkyNews is that jobs have been slashed and Jessops will not honour gift or store vouchers. This also happened a little before Christmas, in the UK, with store vouchers at Comet. The situation was resolved but that may not be the case this time.
In January many people are looking forward to spending gift vouchers they recieved over the holidays. If they were for Jessops they could be disappointed.
PwC, PricewaterhouseCoopers, administrator, Rob Hunt, has outlined differences between directors, funders and key suppliers as a stumbling block. An inability to reach agreement led to Jessops calling in the administrators.
Jessops online sale January 9  2013
Jessops online sale January 9, 2013
SkyNews
Jessops has an online presence. Today that online shop has many great offers but no mention of the financial difficulties. Jessops could be another UK company that remains trading, solely online. Either way 192 stores plus 2,000 jobs, in the UK, are now at risk. It is expected, though, that online trading will cease, at least in the short term.
Frank Jessop opened his first shop in Leicester, in 1935. As consumers opted for digital cameras, Jessops trade slumped. In 2009 HSBC wrote off £34m worth of loans in return for a 50% stake in the business.
So what does 'calling in the administrators' mean in such cases in the UK? According to company rescue,
Administration is a very powerful process for gaining control, when a company is insolvent and facing serious threats from creditors. The Court may appoint a licensed insolvency practitioner as administrator. This places a moratorium around the company and stops all legal actions
The administration must have a purpose and the Government encourages the use of company rescue mechanisms after Administration.
Under the administration option, it is possible for the company and its directors (or a creditor like the bank) to apply to the court to put the company into administration through a streamlined process, by applying to the High Court. However, the law requires that any finance provider (like a bank or lender), with the appropriate security, is contacted and the aims of the administration be discussed and approved. The finance provider must have a fixed and floating charge (usually under a debenture) and the charge holder will need to give permission for the process to go ahead. Five days clear notice is required.
Retailers such as Clinton Cards, Comet and Jessops are partly victims of the digital age but the economic downturn has played its part.
More about jessops, Administration, camera firm, UK company jessops, Economic downturn
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