“This is not about the mass closure of Barratts, it’s quite the opposite. What’s been put out for creditors to vote on is the rescue of the company.”

“This is not about the mass closure of Barratts, it’s quite the opposite. What’s been put out for creditors to vote on is the rescue of the company.”

So said Neville Kahn, one of Deloitte’s administrators helping to steer Stylo’s shoe chains out of crisis. The increasingly notorious pre-pack system has been avoided and instead the intention is to strike Corporate Voluntary Arrangements (CVAs) with landlords and creditors to secure the businesses.

CVAs have been around for a while but are much more seldom used than other insolvency measures. However, they may offer the most satisfactory route out of trouble for both struggling businesses and creditors.

Crucially, a CVA must be approved by creditors, who are then bound by its terms. In Stylo’s case, creditors will be fully repaid, over a longer time frame than would have otherwise been the case, and landlords will be asked to modify rent terms for a set period. Sentiment seems to be on Stylo’s side. Harvey Jacobson, managing director of footwear supplier Jacobson Group, told Retail Week: “It is commendable to find a route which means that suppliers will get paid.”

Stylo would be able to continue trading after refinancing and restructuring and its businesses would exit administration, although the closure of about 150 shops is still likely.

Stylo’s Ziff family has acted honourably. In savage market conditions, it looks like the closest thing to a win-win for both retailer and suppliers.

Stylo’s creditor meeting takes place on February 12 and CVAs would remain in force for two years. Let’s see what happens. The devil will be in the detail, but CVAs might offer a more palatable way forward for other troubled retailers than the pre-pack which, fairly or not, is looking pretty shabby.

Look East

Retailers in search of finance should perhaps brush up on their Arabic. While the coffers of the City remain bare, cash is still available from the petrodollar-rich Gulf economies.

In what is surely a retail first, online grocer Ocado this week secured£10m from the Bank of London and the Middle East in a Sharia’a financing deal.

To access Islamic financing, deals must be structured to avoid gharar, or uncertainty, and maysir – speculation. Tricky perhaps, but Islamic finance assets now stand at US$500bn (£358.77bn). Clearly Middle Eastern financiers remain among the few to whom UK retailers might appeal.

George MacDonald is deputy editor of Retail Week.

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