House of Fraser’s promised £70 million cash injection from Chinese investor C.banner is facing delays due to the legal action filed against it by unhappy landlords.
Last week, a consortium of landlords officially filed a petition in the Scottish courts to challenge House of Fraser’s controversial CVA that was approved by creditors last month.
C.banner’s much-needed £70 million investment was conditional on the approval and implementation of House of Fraser’s CVA, which includes plans to close down 31 of its 59 UK and Ireland stores, reduce rent on 10 that will remain open, and slash 6000 jobs.
The Chinese firm’s investment also means it would purchase a 51 per cent stake in the department store chain from current majority owner Nanjing Cenbest, which is part of the Sanpower conglomerate.
However, the C.banner has now indicated that it would now delay the details of its promised investment until October 31 due to the landlords’ legal challenge.
The details of its investment were initially due to be sent to C.banner’s shareholders yesterday, which would’ve provided House of Fraser the cash injection over the summer.
The landlords’ legal action, understood to be the first posed against a CVA in Scotland, was filed on the grounds of alleged “unfair prejudice against certain creditors, as well as material irregularities in the implementation of the CVA”.
The law firm representing the landlords, Begbies Traynor, said they had a “very strong case” on the basis that they were being treated unequally compared to other creditors.
It was revealed earlier this month that major landlords, including British Land and Derwent, had voted against the retailer’s CVA and prior to the creditors’ vote a separate group of landlords reportedly held talks with law firm Bryan Cave Leighton Paisner about possibly blocking it.
House of Fraser’s wide-reaching restructure plan has been one of the most contested amid the recent surge in CVAs in the retail sector.