JJB saved by creditor agreement

WIGAN retailer JJB Sports has this afternoon been successful in its bid to gain landlord support for a company voluntary arrangement.

It is a move that sees the struggling chain become the first plc to avoid collapse following a consensual agreement with its creditors.

JJB has negotiated new terms with its landlords, which include paying monthly rents on 250 shops, while stumping up £10m to the owners of the 140 stores it wants to close.

A majority of 75% of unsecured creditors by value had to approve the CVA proposal for it to go thorugh, but 99% actually agreed to the deal.

Sir David Jones, executive chairman, saidin a stockmarket statement: “We are delighted by the result of the meetings and the overwhelming support given to the company by our creditors, with every creditor present at the meeting supporting us.

“The approval of the CVA proposal by creditors is a major step forward in the board’s strategy to secure JJB’s long term future by creating a stable financial platform for the revitalisation of our core sports retail business.”

If the plan had been rejected, the company’s banking lines would have been withdrawn, forcing it into administration.

Brian Green, head of restructuring at KPMG in the North West, and supervisor of the CVA, said: “Today’s CVA agreement is ground-breaking and shows that an innovative approach to tackling the problems faced by many companies in the harsh economic climate can ensure the company continues to trade and, in this case, protect nearly 12,000 jobs.  The meeting itself was a resounding success with 99% of creditors voting in favour.

“The CVA process can be compared to aspects of Chapter 11, the US insolvency regime, which seeks to protect the legal entity. Indeed the recent Budget announcement on insolvency reform shows a growing sense that the UK system should do more to protect the legal entity of a company by offering more pre-administration options.”