It’s crunch for UK retailer GAME, as its bosses at Game Group are reportedly close to pulling the plug on the whole outfit following recent financial troubles.
A source close to UK newspaper The Express (via) said: “There is a real risk that GAME’s directors will pull the plug because they can’t be sure that the company can survive through the next trading season, and then insolvency becomes inevitable.
“They are in discussions with their legal advisers about whether to shut up shop rather than rack up more losses.”
The Express further reports that the Royal Bank of Scotland, which Game Group last month convinced to relax its debt covenant, was running out of patience with the business. “The immediate response from RBS will be to push for more store closures, but the tipping point for the directors and the lending banks will come when the stores don’t have products to sell,” said an “industry source”.
“This could happen if more suppliers follow suit.”
Yet another source added: “RBS will be looking for the best way to secure its position or improve it. Suppliers pulling their products is a stepping stone to administration, but the problem for RBS pulling the plug is that it will be an expensive and complex administration because Game has 1274 stores across Europe and Australia.
“Lending banks will only want to consider a pre-pack administration, where there is a pre-arranged buyer, but who would want to buy GAME?”
It’s sounding like a final decision on GAME, whether it is to be bought, shut down, or scaled down, is immanent.