The issue relates to a property on New York's Madison Avenue that the group had leased when it was operating the Mallett furniture brand from the premises.
It had bought Mallett in 2014 and, although the brand was later sold in 2018 to valuation firm Gurr Johns (which owns auction house Dreweatts), the lease and subsidiary in New York remained with the Stanley Gibbons Group.
The group had sublet the New York premises to luxury brand Stella McCartney however during the pandemic the shop closed and according to Stanley Gibbons (and a subsequent court case) the Stella McCartney brand stopped paying rent in April 2020.
Stanley Gibbons said that this meant “in turn… Mallett was unable to pay the landlord” rent due.
In August 2021 Mallett reached a settlement agreement with the tenant which terminated their tenancy. However the group said: “Mallett Inc has been unable to negotiate a settlement with the landlord for the outstanding rental arrears and has been unable to negotiate early termination of the lease”.
“Minimise future liabilities”
On advice of the group’s attorneys, it decided to enter Mallett into a Chapter 11 process in the United States.
It added: “The Chapter 11 bankruptcy filing will allow Mallett to promptly liquidate its assets in the order of priority required by the US federal Bankruptcy Code, with timing and amount paid to creditors approved by the New York Bankruptcy Court before distributions are made.”
Graham Shircore CEO said: "It was always our hope that we could reach a negotiated settlement with all parties in connection with the New York lease. Unfortunately, this has not been possible with regard to one of the parties concerned. Therefore, in order to protect the group's remaining assets and minimise the future liabilities the decision to place Mallett Inc in to Chapter 11 has been taken. We hope that the Chapter 11 process in the US can be concluded as swiftly as possible and in a manner which is optimal for all creditors which include a number of other Group companies.”
The group said it will update shareholders on any material developments in the Chapter 11 process as and when they occur.
Further details of Stanley Gibbons Group's update is on the London Stock Exchange website.