// 20 Debenhams stores may face the axe in early 2020
// Debenhams’ new owners are reportedly preparing a CVA to launch imminently
// The store closures would be among 50 that will shut during a 3-year period
The new owners of Debenhams are reportedly days away from launching a CVA which could include plans to shut down 20 stores in early 2020.
According to Sky News, Debenhams will launch a CVA in the latter half of this week and have appointed KPMG to oversee it.
Should this eventuate, a handful of the department store’s branches in its 165-strong UK store estate could close down after this year’s Christmas trading period.
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Sky News added that the initial round of closures – which places around 1000 jobs at risk – form part of Debenhams’ already-announced plans to axe 50 shops in the next three-to-five years.
The CVA will also entail rent reductions across the rest of Debenhams’ UK store estate.
The CVA would need to be approved by creditors first, and sources speaking to Sky News said a meeting could be held next month to vote on it.
With some landlords are expected to oppose the CVA, approval from 75 per cent of creditors by value are required in order for it to go ahead.
The news comes days after it was confirmed that Debenhams chief executive Sergio Bucher was set to resign with a pay-off thought to be around £700,000.
Chairman Terry Duddy will take the reins in the interim as executive chairman while a search for a new chief executive is conducted.
The rumoured CVA is part of a long-awaited plan after Debenhams was placed into a pre-pack administration earlier this month.
The embattled department store had appointed administrators who immediately sold the PLC part of Debenhams to a newly-incorporated company controlled by secured lenders in a pre-pack administration deal in return for reducing the retailer’s £600 million debt.
The lenders – which consists of banks, hedge funds and bondholders – have drafted in advisers from Alvarez & Marsal to lead Debenhams’ restructure.
Meanwhile Lazard, the investment bank which advised Debenhams’ board in the period before it called in administrators, is advising on a sale process.
The pre-pack administration deal also cleared the way for a £200 million refinancing plan, announced in March, to go ahead.
The deal also meant all of Debenhams’ previous shareholders – including Mike Ashley’s Sports Direct, which was the biggest shareholder with a near 30 per cent stake – had their equity wiped out.
Ashley labelled the administration a “national scandal” while Sports Direct wrote to the Financial Conduct Authority complaining that Debenhams’ administrators were not conducting a “genuine” sale process.
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