Debenhams owners add liquidation to range of options for stores chain

Liquidation is one option being considered by the owners of department store chain Debenhams.

According to Sky News, they have appointed financial investor and adviser Hilco Capital to oversee such a strategy should they fail to find a buyer for the stricken retailer.

Investment bank Lazard was appointed by the administrators of Debenhams in late July to handle a sale to a third party to bring its current administration to a close. This is the second time the chain has entered administration within a year.

It is believed administrators are keen to conclude a sale process by the end of next month.

However, should no buyer be found, it could result in the liquidation of the 242-year-old chain and the loss of 14,000 jobs – one of the biggest casualties of the coronavirus pandemic, so far.

Hilco specialises in helping wind-down distressed retail businesses

Industry sources this weekend described Hilco’s involvement with Debenhams as “contingency planning”.

Debenhams has already announced around 6,500 redundancies since the Government imposed lockdown measures in March when the pandemic started to take its toll.

In a statement this weekend, a Debenhams spokesman said: “Debenhams is trading strongly, with 124 stores reopened and a healthy cash position.

“As a result, and as previously stated, the administrators of Debenhams Retail Ltd have initiated a process to assess ways for the business to exit its protective administration.

“The administrators have appointed advisors to help them assess the full range of possible outcomes which include the current owners retaining the business, potential new joint venture arrangements (with existing and potential new investors) or a sale to a third party.”

Hilco has already worked with Debenhams, on the closure of 18 of its stores this year.

Since the ‘for sale’ sign went up last month, it is believed several parties have expressed an interest, though no firm offers have emerged.

In April 2019, the chain underwent a pre-pack administration which was followed by the closure of several stores.

However, in April this year management filed a Notice of Intent to appoint an administrator.

The firm said it had the support of its lenders and they planned to provide the funding for the administration.

Debenhams had already furloughed the vast majority of its workforce and the firm being placed into administration was aimed at protecting it from creditors during the coronavirus pandemic.

Prior to the coronavirus pandemic, Debenhams traded from 142 stores. It has since closed a total of 18 sites.