Fri, 10 Apr 2020 | ADMINISTRATION
The long-established British retailer Debenhams has appointed insolvency firm FRP Advisory to oversee an administration process - the second time this has occurred in twelve months.
CEO Stefaan Vansteenkiste, a business turnaround specialist drafted in last year, said it was due to "unprecedented" circumstances caused by the UK coronavirus lockdown and was to "protect the business, the employees, and other important stakeholders".
Last year its lenders, including hedge funds Alcentra, Silver Point Capital and Angelo Gordon formed a new company as part of a pre-pack administration, enabling it to delist its shares. This was followed by a Creditors Voluntary Arrangement (CVA) whereby it shed all old shareholders, lose certain creditors, negotiate new rent contracts, yet keep its pension fund in place. This all followed a pre-tax loss of £491 million in 2018 - the largest loss in the company's history. Following
Debenhams began its life in 1778 when William Clark set up a draper’s store at Wigmore Street in London's West End selling premium bonnets, gloves, fabrics and parasols.
The administration is thought to essentially be a strong-arm strategy to obtain further relief during the lockdown period, with the aim of being able to recommence trading after the lockdown, thereby safeguarding its existence along with up to 22,000 jobs. However, at least 20 stores out of the 120 in the UK may be kept permanently closed. It already closed 22 stores in January 2020. A company spokesperson said the administration process would be 'light touch', with managers continuing to run the business under the supervision of FRP.
The company also announced that its 11 stores in Ireland, currently temporarily closed, would be put into liquidation in a totally separate process. Vansteenkiste said, "We are desperately sorry not to be able to keep the Irish business operating but are faced with no alternative option in the current environment". Whether any stores there would be kept operating is down to the liquidators.
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