Mon, 07 Mar 2016 | BUSINESS SALE
After talks with landlords on its 164-store estate stalled, BHS has entered a company voluntary agreement (CVA) in an attempt to slash costs and save the distressed business.
BHS entered the CVA on 3 March 2016, and the move will pitch the retailer against some of the UK’s biggest institutional landlords.
Administrators KMPG have been working with BHS to negotiate a reduction in rent on around 87 of its British stores. The retailer added that it would need to secure a “substantial reduction” of at least 75 per cent on 40 of its stores in order to keep them running.
Darren Topp, BHS chief executive, said: “The CVA proposal is a necessary milestone in resetting BHS to ensure its long-term future.
“Some of our stores are loss-making as we are being charged rents that are too high relative to today’s market. The CVA will address this issue.”
A CVA is a form of insolvency, with a legally binding contract to restructure the business in order to pay creditors over a fixed period. At least 75 per cent of BHS’s creditors will need to back the move for a CVA, with a vote due to take place on 23 March 2016.
A spokesman for BHS said: “It is hoped that the store closure number will be kept to a minimum.”
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