In the past few days, retail businesses have gone down in flames and seemingly arisen unscathed from their own ashes within days to carry on trading.

Three high street retailers – tea and coffee specialists Whittard’s, men’s fashion house Officers Club and now fashion chain USC – have agreed ‘pre-pack’ administrations within the last week.

A pre-pack administration is where a buyer has agreed to strip the profitable assets from a business and carries on trading as a new company, leaving the debts and unprofitable parts of the business behind for someone else to deal with.

A pre-pack a is a frying pan or the fire solution – on the one hand the new owners claim they are saving jobs, but on the other, businesses owed money by the old company are left with no way to reclaim their loss.

In many cases the businesses owed money are pension funds, which are the landlords of the boarded up shops appearing on the high streets.

The suppliers are not hit as badly because they are demanding cash upfront for new stock.

So far the recession is making the rich richer and the poor poorer, as ordinary folk worry over the future of their jobs, mortgages and families, those with ready cash are making a killing.

The bottom line is do pre-pack investors receive all praise as white knights risking their cash to save jobs, or is that really just spin on opportunists chancing their arms to make even more cash on the back of someone else’s loss?

Perhaps the credit crunch is an eye-opener for everyone as at last the veil of secrecy draped over business deals and money markets is lifted to reveal the greed and hypocrisy of how we all got in to this mess in the first place.

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Tags: British Economy, Credit Crunch, Debt, Financial News, Money, pre-pack administration Officers Club, Retail, Whittard of Chelsea

Trouble’s brewing for tea and coffee specialist Whittard of Chelsea, which is about to call in the administrators after months of poor sales.

Whittard of Chelsea are owned by Icelandic group Baugur and backed by Landbankski, the troubled Icelandic bank. After Iceland’s banking system has reached meltdown, the banks have cut off their cash support to Whittard’s.

Landbankski’s major shareholder Bjorgolfur Gudmundsson also owns Premier League club West Ham United, which is up for sale for a rumoured £250 million.

The City also fears entertainment chain Zavvi, the former Virgin Megastores, is close to the brink after the collapse of Woolworths’s distribution arm, which was its main supplier.

Celebrity jeweller Theo Fennell’s has announced an £840,000 loss, the first for three years.

The chain, whose jewellery is sold at prime London shops and concessions around Britain and the world, blamed the recession for sales falling by 20 per cent from £12.8m to £10.2m in the six months to 30 September.

Clients include Liz Hurley, Elton John, Elle Macpherson and the Beckhams. The downturn has forced the company to postpone a new store on Bond Street in London.

Home Retail Group, owner Homebase DIY chain, is holding up the FTSE as many retail sector shares fell over concern about the discounts on the high street.

Retail analysts say on 20% discounts, stores are halving profits. On 40% discounts, they are breaking even and on anything more, they are trading at a loss.

The City expects to see 15-20 major high street retailers to collapse after the January sales.

The FTSE closed down 37.77 points at 4,249.16 and in New York; the DOW was also down 54 points to 8519. The pound showed little movement overall, ending at 1.074 Euros and US $1.47.

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Tags: banking system, Baugur, Bjorgolfur Gudmundsson, Credit Crunch, Inflation, Landbankski, Premier League club, Virgin Megastores, West Ham United, Whittard of Chelsea