Page last updated at 17:38 GMT, Monday, 2 March 2009

Mosaic firms into administration

Karen Millen store
Karen Millen is among the brands to be saved in the deal.

Mosaic, which owns some of the most famous brands on the UK High Street, has gone into administration, with debts of about 400m.

But most of the group, including Oasis, Karen Millen, Warehouse and Coast have been immediately sold to Mosaic's main creditor - Icelandic bank Kaupthing.

A new firm owned by Kaupthing and former Mosaic bosses has been formed.

But Principles and The Shoe Studio - two of Mosaic's other brands remain in administration, risking 4,200 jobs.

The restructuring under the new management firm, Aurora, has saved 8,700 jobs said administrator Deloitte.

'Advanced' talks

The new funding package would "enable the brands to develop and realise their potential", an Aurora spokesman said.

Karen Millen
Anoushka G

It added it was looking forward to "an ongoing supportive relationship with its suppliers and other key partners who have been very loyal to all the Mosaic brands over the challenging past few months".

The Principles brand employs over 2,300 staff and trades from over 400 outlets of which 94 are single stores and the remainder concession outlets - within other stores.

The Shoe Studio brand employs 1,870 staff and trades from 13 single stores and 270 concessions.

However, they are continuing to trade while the administrators look for buyers for the two firms and Aurora said negotiations were "well advanced" for Shoe Studio to find a new buyer, while "several bidders" had emerged for Principles.


The Shoe Studio

The deal, which saw several Mosaic brands sold on, is known as a pre-packaged administration.

This is when a sale of an insolvent business is agreed before the administrator is appointed and is then rapidly executed without the business being offered on the open market.

Pre-packs often involve the sale of the business to the existing owners or management.

Many argue that they are a useful tool for saving a firm where any delay could to destroy or severely reduce its value - preserving jobs in the process.

Coast shop
Coast was part of Mosaic's business that moves under the new management

But there are criticisms that such deals are not always transparent, that they do not always fairly value the firm and that creditors may not be aware of the deal's existence until after the sale.

This has led to perceptions - especially where existing managers or owners buy a business - that the owners have effectively taken on a debt-free business and can trade as before, while creditors lose out.

Kaupthing, Iceland's largest bank, was the country's third to be nationalised in October last year.

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