What Rhymes With Wilko?

Those of you familiar with them will have spotted that Hilco Capital have been involved in the Administration of Wilko. They are a prominent financial investor and advisor, working across a broad range of sectors. They specialise in dealing with business which are underperforming, distressed, are non-core subsidiaries or require a ‘retirement sale’.

Given the often distressed nature of the scenarios, they will often lend when others won’t.

They work in a variety of situations where capital is required, and typically work alongside management teams, providing hands-on and operational support.

They apparently lent £40m to Wilko in January 2023, and are now allegedly the largest creditor after the company’s pension fund. There has been criticism in the media about the dual role that Hilco hold in this case; not only are they a secured creditor to the company, but they are also advisors to the Administrators, PwC, assisting with the valuation and sale of the stock.

Hilco Capital was set up in 2000 as a London branch of the US restructuring firm of the same name, and initially specialised in valuing and selling stock.

They famously bought Homebase for £1 in 2018, turned it around to a profit of £55.6m in 2020, and were also involved with the Administrations of HMV, Debenhams, Toys 'R' Us and BHS.

There has been criticism in the media of conflicts of interest, but these could be argued to be largely unavoidable, as they are instructed to assist with stock disposals and stock funding due to their strong reputation in realising value from stock, as well as there being little competition out there who could handle similar sized operations. Richard Hyman, an independent retail analyst, claims that by buying the debt, Hilco are able to “put themselves in the driving seat and are at the top of creditors’ batting order when it goes into Administration”. Mr Hyman has clearly been keeping himself abreast of the statutory order of priority.