Fears of 1,000 job losses at Internacionale

Picture: Alan Watson

The collapse of the Glasgow-based firm is another setback for the high street, which has seen the likes of Comet, JJB Sports and Woolworths disappear in the face of subdued consumer spending and online rivals.

Internacionale, which has 89 stores across the UK, called in administrators from PwC today after falling victim to poor trading and “increasing creditor pressure” from landlords. The chain was bought out of administration in July in a pre-pack deal involving former chief executive Raj Sehgal, managing director Naresh Abrol and finance director William Milton.

FC Fund Managers, a corporate restructuring specialist, is believed to have taken control of Internacionale last month after buying £35 million of debt. In an effort to cut costs, 90 people were made redundant, mainly at its Glasgow head office.

However, joint administrator Bruce Cartwright, pictured, said the retailer’s owners decided they could no longer support the business and opted to wind it down.

Cartwright, a partner at PwC’s Scottish business recovery service, said: “The company directors have worked with key stakeholders to try and find a solution to preserve the business. However, these efforts have proved to be unsuccessful against the backdrop of a fiercely competitive retail sector which, despite the improving economic conditions, can be unforgiving to businesses in financial distress.

“We are currently working with management to agree an orderly wind-down of the company, but we welcome any approaches to purchase parts of the store portfolio and safeguard jobs. We intend to continue to trade over the coming weeks in order to sell as much of the retail stock as possible and maximise the return to creditors. Staff have been – and will continue to be – paid.”

Headcount at Internacionale has fallen from 1,500 in July to about 1,000 as the firm tried to stem its losses. The chain employs 194 people in Scotland and has 16 stores north of the Border, along with its Glasgow head office and warehouse operation.

The business will continue to trade, but Cartwright said further job losses and store closures were inevitable unless a buyer can be found.

He added: “The company and the administrators are making every effort to help staff through this difficult transition.”

Branches facing closure include those in Aberdeen, Coatbridge, Glenrothes, Edinburgh, Motherwell and Stirling. Stores in Cardiff and Swansea were closed recently.

Internacionale, founded by Scots entrepreneur Ken Cairnduff, was sold in 2006 to a management buy-out team in a deal worth £45m. Two years later the business, as well as its sister homewares chain, Au Naturale, fell into administration.