BOSSES at the Carlisle based retail fashion giant Edinburgh Woollen Mill say that false rumours about its debts have combined with ‘brutal’ trading conditions to leave it on the brink of collapse.

With a court approved ‘breathing space’ giving the firm protection from creditors for ten days, EWM Group – which moved its HQ to the city and recently bought the former Hoopers store in Castle Street – has revealed some of what lies behind the crisis.

More than 20,000 jobs are at risk if no viable rescue package can be found for the firm, which employs almost 200 people in Carlisle.

EWM Group has notified the High Court of its intention to appoint administrators. Senior figures at the firm confirmed potential buyers have expressed interest.

Insiders say the crisis was triggered by the combination of the pandemic driven retail downturn on the High Street and a claim – vehemently denied by EWM Group bosses – that it owes $27m to suppliers in Bangladesh.

This has led to a shutting down of credit sources. A restructuring of the business is on the cards, but managers say cuts are inevitable.

A spokesman said that in recent weeks, EWM has received expressions of interest for various parts of the group and these are being assessed.

Steve Simpson, EWM’s chief executive, said: “Like every retailer, we have found the past seven months extremely difficult.

“This situation has grown worse in recent weeks as we have had to deal with a series of false rumours about our payments and trading which have impacted on our credit insurance.

“Traditionally, EWM has always traded with strong cash reserves and a conservative balance sheet but these stories and the reduction in credit insurance – against the backdrop of the initial lockdown, current lockdowns and the second wave of Covid-19 reducing footfall have made normal trading impossible.

“As directors, we have a duty to the business, our staff, our customers and our creditors to find the best solution in this brutal environment.

Rob Johnston, chief executive of Cumbria Chamber of Commerce, said the firm had a business model based on High Street shopping by more mature shoppers, with little online presence.“What’s really disappointing and sad is that this was an exciting development for Carlisle and Cumbria to get EWM bringing its HQ to the city. They made a significant investment and brought a lot of people here.

“That’s exactly what we wanted to see: it brings high-net worth individuals into the city.It’s going to be months before that demographic is comfortable with going shopping.

“There’s always a point in any business when they have to make a decision about whether they have the money in the business to continue trading.

“For Cumbria – and for Carlisle in particular – this is a blow.

“It was a great win for us to get a business of that standing to have its international HQ here. It appeared to be doing rather well: the business model was working; there was talk of more acquisitions.This must be entirely as a result of the pandemic and the impact on its customer base.”

He added that there may be some hope that if the business remains in tact and has a HQ it could continue to be in Carlisle.

The company is a mainstay on British high streets and also runs a raft of other retail brands, including Peacocks and Jaeger, which it has acquired over the past 10 years after their own previous financial difficulties. High street footfall was already under pressure at the start of the year as shoppers moved online, but restrictions in the face of the pandemic have proved a heavy blow to many retailers. EWM also has a distribution centre at Kingstown.