Debenhams Plc

In the U.K., Debenhams Plc has enjoyed a storied existence dating back to the 18th century. It was in 1788 that a London-based business was formed by founder William Clark, and began operation as a drapers' store. More than two centuries have passed since partner William Debenham joined Clark to form a corporation and eventually become the sole namesake, and in that time the company spread into 27 countries, with nearly 8,000 employed as of 2018. On Apr. 9, Debenhams announced that it was going into "pre-pack administration"- as a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions, similar to bankruptcy in the U.S.

CreditRiskMonitor® fixed a cautious eye upon Debenhams and subscribers to the service were aware for more than a year that trouble was brewing:

Debenhams FRISK image

This Bankruptcy Case Study will show how the FRISK® score was able to detect danger within Debenhams Plc before most knew the extent of the internal damage within.

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Our FRISK® score model incorporates four powerful risk inputs:

  • “Merton”-type model of stock market capitalization and volatility
  • Financial ratios, including those used in the Altman Z”-Score Model
  • Bond agency ratings from Fitch, Moody's, and DBRS Morningstar
  • Website click pattern data from CreditRiskMonitor® subscribers, representing key credit decision-makers at more than 35% of current Fortune 1000 companies plus thousands of other large companies worldwide

Since the start of 2017, the FRISK® score’s rate of success in capturing public company bankruptcy is 96%: 235 identified out of 243 bankruptcies. In any given year, you can count on one hand the times we miss – and in those outlier cases, the circumstances deal with unusual, unforeseen events such as natural disasters and CEO fraud.

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About Bankruptcy Case Studies

CreditRiskMonitor® Bankruptcy Case Studies provide post-filing analyses of public company bankruptcies. Our case studies educate subscribers about methods they can apply to assess bankruptcy risk using our proprietary FRISK® score, robust financial database, and timely news alerts.

In nearly every case, a low FRISK® score gave our subscribers early warning of financial distress within a one-year time horizon. Our proprietary FRISK® score predicts bankruptcy risk at public companies with 96% accuracy. The score is formulated by a number of indicators including stock market capitalization and volatility, financial ratios, bond agency ratings from Moody’s, Fitch and DBRS, and crowdsourced behavioral data from a subscriber group that includes 35% of the Fortune 1000 and thousands more worldwide.

Whether you are new to credit analysis or have decades of experience under your belt, CreditRiskMonitor® Bankruptcy Case Studies offer unique insights into the business and financial decline that precedes bankruptcy.