JJB faces tough sell with second life-saving CVA
STRICKEN retailer JJB Sports faces a more hostile climate with its second attempt to complete a Company Voluntary Arrangement (CVA) to offload unprofitable stores within two years.
The company announced a move on Friday to use the process to close 45 stores within the next year and placing a further 50 stores “under review”, which could lead to them being closed within the next two years. It added that it had identified around 150 remaining stores which it considered to be “core” to its future.
However, the Sunday Times argued that the retailer may experience much greater difficulty in getting 75% of creditors (including landlords) to back the CVA, which is its second in two years.
The Wigan-based company said last week that if the deal were not approved, it may face administration and the prospect of laying off 6,000 staff.
The newspaper said that property owners who backed the firms last Creditors Voluntary Agreement in 2009, were less reluctant to back a second planned restructuring.
The newspaper quoted one landlord who said: “There’s a feeling that even if you support the CVA, you’re delaying the inevitable.”
Another said that if approved, the deal could lead to several more retailers attempting to ditch unprofitable stores via the CVA process.
The Independent, meanwhile, reported that Bury-based competitor JD Sports, which recently announced that it had entered into early stage talks about a possible takeover of JJB, would step back from launching a bid until the outcome of the CVA process is decided.
If landlords fail to back its proposal, JD Sports could pick up JJB’s assets via a “pre-pack” administration deal, it said.
Meanwhile, the Mail on Sunday said that the firm was facing a series of legal battles with former members of staff. The company was the subject of an employment tribunal hearing started in Manchester on Friday where its former director of internal audit, Richard Hodson, was claiming wrongful dismissal.
The company is also facing a claim from its former director of human resources and has just settled a claim out of court with its former head of marketing Stuart Jones, who is the son of ex-JJB chairman David Jones.
