Retail landlords with Debenhams stores will bear the brunt of 22 shop closures and rent cuts after two company voluntary arrangements were approved by the department store’s creditors.
Landlords and creditors, which include Mike Ashley’s Sports Direct group, met today to vote on the CVA processes. KPMG, which will oversee the CVAs, said the proposals gained a “significant” majority vote, above the required 75% threshold.
Now that the CVAs have been given the go-ahead, 22 stores will see rents slashed by 50% until Q1 2020, after which these will close.
It is understood that rents and business rate payments for this year at a further 36 shops will also halve. These include Debenhams’ stores in Chester, Croydon, Falkirk and the Westfield London shopping centre.
Of its 166 stores in the UK, 48 will not be affected by rent cuts. Rents at the remainder, however, will be slashed by up to 35%.
Landlords of stores with reduced rents will decide whether to boot out Debenhams as their occupier, three months after its next quarterly rent payment in June.
Terry Duddy, interim executive chairman of Debenhams, said: “I am grateful to our suppliers, our pension stakeholders and our landlords who have overwhelmingly backed our store restructuring plans.
“We will continue to work to preserve as many stores and jobs as possible through this process. This is a further important step to give us the platform to deliver a turnaround.”
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.”
Further closures will be confirmed “in due course”. The retailer, which has already confirmed the closure of its Lodge Farm warehouse, is also considering whether to consolidate its three warehouse facilities.
The news comes shortly after a failed sale process for the department store, in which it did not receive any suitable bids. Its lenders remain in control of the company.
The retailer entered pre-pack administration in April, in which it passed on its ownership to an investor consortium called Celine.
FTI Consulting, Debenhams’ administrators, subsequently launched a marketing process to sell the company.
The 22 store locations
- 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
- Wolverhampton
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