Debenhams under more pressure as insurer cuts cover to suppliers

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Debenhams faces a battle on yet another front as it’s revealed one of its leading credit insurers has cut the cover provided to the retailer’s suppliers.

Atradius has stopped all of its credit cover for Debenhams’ suppliers ahead of reported fears over the department store’s health in the run up to Christmas.

The decision will pile on yet more pressure on Debenhams’ cash reserves, as without insurance suppliers will demand payment upfront, straining the retailer’s working capital.

The news comes as Debenhams unveiled a turnaround plan to investors last week in its latest efforts to receive it business model.

“Regrettably, we understand Atradius is reducing cover as a result of repeated press speculation about Debenhams,” a spokesperson for Debenhams told press.

“Credit insurers typically tighten cover when the retail industry is under pressure, and this is an issue affecting many retailers. We are managing this ‎with our suppliers and continue to maintain more than adequate headroom on our facilities,” they added.

The move comes just a few weeks after Sir Philip Green’s Arcadia business had its credit insurance cut roughly in half by Euler Hermes.

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3 COMMENTS

  1. If Debenhams is forced to close due to the short selling speculators and the ‘press’ who exaggerate and over report doom and gloom then they should sue the media barons and a the government should investigate. We will be the only country in the world without high streets in our towns – who knows what we will sadly have instead! Today the media control and decide upon what the news is – very very worrying times!

  2. Andy
    You really shouldn’t blame the messenger. The problem lies with the short term venture capitalists who took over this firm and stripped out its cash and after loading it up with debt sold it on.
    This debt now looks unserviceable and allows the company little headroom. It is now dependant on the goodwill and credit of its suppliers. You cannot expect suppliers to take unreasonable risks if the owners are neither prepared nor in a position to guarantee payment

  3. Greedy private equity firms loading companies with debt while stripping assets are getting away with running companies into the ground as they blame the weather and Brexit or landlords etc The company falls into administration and they get their money back and staff and customers left out of pocket.

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