Ihr Platz

Gordon Brothers undertook a significant role in turning around a German drugstore chain that had run into financial difficulties.  Ihr Platz had a network of 689 stores but, after several years of trading difficulties, the company’s debt was acquired by a consortium of banks, led by Goldman Sachs.  Gordon Brothers also became an investor in Ihr Platz.

Goldman Sachs, together with Gordon Brothers, decided to undertake a radical restructuring programme.  This involved placing the retailer into insolvency to give it the freedom to implement a successful turnaround.  This was an innovative strategy in Germany, where insolvency has generally led to the liquidation of a business.

The successful use of an Insolvency Plan to restructure a business financially had rarely been achieved in Germany and Ihr Platz was the first retailer to attempt it, so it was a ground-breaking move for the country as well as the company.

After a review of trading and the property portfolio, a decision was made to close 81 stores and Gordon Brothers was appointed to trade them out.  While successfully achieving the objective of closing the 81 stores, the operation also provided an opportunity to clear significant levels of redundant stock from the entire estate – providing immediate and much needed additional liquidity for the business.

Gordon Brothers implemented a marketing programme which included running a series of promotional campaigns across the 81 stores.  All stock was sold and the stores were delivered ‘broom-clean’ and on schedule.  Gordon Brothers’ financial guarantee, paid in advance, was invaluable in helping the management team to negotiate with the various stakeholders in insolvency.

Gordon Brothers continued to support its investment with several ongoing turnaround projects, involving its experts in store layout, merchandising, promotional strategy, supply chain integration and implementation management.

After six months, the creditor assembly voted to accept the insolvency plan and the company exited insolvency on a firm footing.

David Trucano, Goldman Sachs, said, “We achieved exactly what we needed by using Gordon Brothers. Immediately on their appointment, they took on all aspects of the clearance operation and allowed senior management to concentrate on the financial and operational aspects of the insolvency process. Furthermore, we were able to monetise our redundant stock at a stroke.”