Wed, 10 Apr 2019 | ADMINISTRATION
Thought to be the largest department store in the UK, Debenhams has entered administration in the face of crippling debt and fierce competition on the high street.
Entering a pre-pack administration, the business has been sold to its lenders and has passed on control, and now have access to £200 million worth of emergency funds.
Business advisory firm FTI Consulting has been called in to handle the administration process, with the administrators stating: “The group has been sold for a price which in our opinion is the best price reasonably obtainable at the time of sale.”
As a result of this transaction, Debenhams will be “immediately marketed for onward sale” to salvage funds in order to pay off the company’s debts and cover its pension liabilities.
This action comes in response to Debenhams rejected a £200 million rescue deal from Sports Direct’s Mike Ashley, who also wanted to take over as chief executive.
However, under the company voluntary agreement (CVA), its debts will be reduced and will undergo a restructuring programme. However, roughly 50 stores are earmarked for closure, but none before 2020.
In an attempt to further cut costs, the company will aim to renegotiate rent reductions with its landlords, which insolvency practitioner David Ereira from Paul Hastings law firm says may be met with resistance.
Despite the complications, Debenhams will continue its trading operations as usual. However, Richard Lim from Retail Economics has said: “Debenhams has fallen victim to crippling levels of debt, which has paralysed its ability to pivot towards a more digital and experience-led retail model.
“Put simply, the business has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition. The industry is evolving fast and it paid the ultimate price.”
For more news stories about administrations click here. For all our administrations listings, click here.
An established London bakery in Battersea, recognised for its strong online presence and diverse revenue streams, is now available for sale.
LEASEHOLD
This successful supermarket offers a unique blend of consistent quality and diverse product range, attracting a loyal customer base from up to 40 kilometres away.
Opportunity to acquire a long-standing butcher and deli producer in Skegness, renowned for its quality service and robust community presence.
LEASEHOLD
Looking for more businesses? Try our off-market tool.
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.