House of Fraser creditors have voted in favour of proposals laid out in its CVA, which will see the closure of more than half of its store estate and potentially 6000 job cuts.
The CVA, which was first launched on June 6, includes plans to close 31 of House of Fraser’s 59 UK and Ireland stores and cull up to 2000 directly-employed staff and a further 4000 across brands and concessions.
There are also plans to reduce rent on 10 stores that will remain open, as well as relocate the Baker Street head office in London and the Granite House office in Glasgow to new locations in order to further reduce costs.
The CVA is split into two legal entities: House of Fraser Stores, which contains the retailer’s main operating entities; and House of Fraser Limited, which contains the leases of 14 stores.
The creditors’ meetings for the two legal entities were held this morning, and as with with all CVAs, more than 75 per cent had to vote in favour in order for it to be approved.
House of Fraser said that the approval will enable the retailer to undertake the restructuring it needs to both secure its future and access new capital from C.banner.
The Hamleys parent company will inject the new capital, worth £70 million, after it completes its transaction to acquire a 51 per cent stake in House of Fraser.
The department store retailer said that after the restructuring, it will have “a more sustainable cost base and a platform for future growth to deliver an improved customer proposition”.
It added that it would now begin the process of working with landlords and other stakeholders to implement the proposals in the CVA, and that they were “absolutely committed” to supporting all colleagues affected.
It re-iterated that the stores it had identified for closure, including its Oxford Street flagship in London, would continue to trade until early 2019.
“The approval of the CVAs is a seminal moment in House of Fraser’s history,” chairman Frank Slevin said.
“We must now continue with the implementation of our restructuring plan. This is also an important milestone in the transaction with C.banner and moves us toward the completion of the capital injection first announced in May.”
House of Fraser chief executive Alex Williamson said: “The CVA proposals have been approved by our creditors and we are grateful for their ongoing support and belief in the future of House of Fraser.
“This was clearly a difficult decision to take but is, ultimately, the only one to secure our future.
“Our focus is on supporting all of our affected colleagues and we are exploring every opportunity available to them working alongside the Retail Trust and the wider retail community.”
Will Wright, restructuring partner at KPMG and joint supervisor of the CVA, said: “The approval of these CVAs provides House of Fraser with the breathing space it needs to proceed with its proposed operational restructuring plan across a smaller core portfolio of stores.”