Carpetright has won the approval of creditors and landlords to push ahead with its proposed company voluntary arrangement (CVA).
Over 75 per cent of creditors approved the proposal, which now means that 81 stores and around 300 staff are at risk. it will also seek significant rent reductions on a further 113 stores.
It has already pulled the shutters on 11 stores, having earmarked 92 loss making stores earlier this month for potential closure.
The embattled flooring retailer, which currently employs around 2700 staff across 409 stores, is looking to raise around £60 million in a rights issue to help alleviate some of its financial strain.
However, it is also understood to currently be breaching its banking arrangements.
The CVA, which is being overseen by Deloitte, will face another vote from shareholders on Monday, although it is understood the creditor vote would take precedence should shareholders reject the proposals.
“Addressing our legacy property issues to reduce our fixed costs to sustainable levels is critical to securing Carpetright’s recovery,” chief executive Wilf Walsh said.
“Receipt of creditor approval for the CVA proposal will enable us to take tough but necessary action to establish a right-sized estate of stores on economic rents, which is essential to restoring our profitability.”
Earlier this week Carpetright’s largest shareholder Meditor Capital Management took advantage of the company’s battered share prices and nearly doubled its stake to 29.99 per cent.
If Meditor had gone over the 30 per cent threshold, it would have had to make a formal takeover bid for Carpetright.
Although it stopped short of making a bid for the firm, Meditor invested £12.5 million into Carpetright via a loan last month in exchange for new shares.
In January its share price dropped 47 per cent as it reported a 3.6 per cent drop in sales over the crucial Christmas period, this followed a 93 per cent drop in profits a month prior.
Last month its chief executive admitted that the “aggressive store opening strategy pursued by the company’s previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents which are simply unsustainable.”
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