Struggling Debenhams given green light to press ahead with restructuring plans
Struggling department store Debenhams has been given the green light to press ahead with its restructuring plans.
The approval from creditors means the store will close 22 stores and bring in rent cuts at many others.
Landlords and other creditors approved the closures which form part of two company voluntary arrangement (CVA) deals Debenhams’ new owners have said are necessary to prevent the business collapsing.
Debenhams is the latest high street name to go down the CVA route and more are expected to follow over the coming year.
The retailer’s chairman, Terry Duddy said “We did not want to be here … but the alternative has been stark.”
He said he was confident Debenhams had a future if the restructuring plan went ahead.
Last month, the retailer was taken over by a syndicate of banks and hedge funds it owed money.
The move meant that Mike Ashley’s attempted takeover did not go ahead.
Jim Tucker, restructuring partner at KPMG and joint supervisor of the CVA, said: “The approval of these CVAs marks an important step forward for Debenhams, which can now put the next phase of its financial and operational turnaround plans in motion.
“As with all CVAs, more than 75% of creditors had to vote in favour in order to pass the resolution. Today’s vote saw the significant majority of all voting creditors choose to approve the two proposals.”
Around 1,200 staff work at the affected stores. The closures will be part of two CVAs and are expected to be the first wave that will eventually see around 50 of Debenhams’ 166 stores shut.
In April, its chief executive Sergio Bucher left the firm after a pre-pack administration resulted in the company’s lenders taking control.
The stores expected to close in 2020 are Altrincham, Ashford, Birmingham Fort, Canterbury, Chatham, Eastbourne, Folkestone, Great Yarmouth, Guildford, Kirkcaldy, Orpington, Slough, Southport, Southsea, Staines, Stockton, Walton, Wandsworth, Welwyn Garden City, Wimbledon, Witney and Wolverhampton.