Debenhams creditors have approved the department store’s CVA proposals, paving the way for 22 store closures.
Debenhams, which currently has 165 stores and employs about 25,000 people, has had its plans for a company voluntary arrangement (CVA) approved. The retailer has been in difficulty since reporting a record pre-tax loss of £491.5m in 2018, and in April was taken over by its lenders – which saw the retailer’s shareholders, including Sports Direct founder Mike Ashley, lose their stakes.
The approval of the CVA, which Debenhams said was backed by a majority significantly above the required threshold of 75% on each proposal, will see an expected 22 stores close by January 2020. A further 105 stores will benefit from rent reductions and lease negotiations.
Terry Duddy, 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.”
Speaking on the day of the announcement, Jim Tucker, restructuring partner at KPMG and joint supervisor of the CVA, added: “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.”