// Debenhams officially files for administration
// It comes 12 months after Debenhams last fell into administration and less than a year after it launched its ongoing CVA
// Debenhams said FRP Advisory would adopt what’s described as a “light touch” administration
Debenhams has officially filed for administration, making it the second time within a year that it has taken this kind of insolvency process as it struggles amid the coronavirus crisis.
Following its notice of intent earlier this week, the embattled department store today appointed Geoff Rowley and Alastair Massey of FRP Advisory as its administrators.
The news comes 12 months after Debenhams last fell into administration, which saw its current owner – a consortium of banks and lenders known as Celine – swoop in to take control and launch a CVA soon after.
READ MORE:
- Debenhams files notice of intent to appoint administrators
- Debenhams fails to top-up pensions scheme as administration looms
- Debenhams prepares for another administration
Debenhams said the decision to enter administration today was aimed at protecting the business from the threat of legal action from creditors, which could risk pushing the retailer into liquidation while its 142 UK stores remain closed due to the government-mandated lockdown.
Debenhams said FRP Advisory would adopt what’s described as a “light touch” administration, meaning the existing management team remain in place under the direct control and supervision of the administrators.
This approach aims to bring the department store chain “back into a position to re-open and trade as many as stores as possible” once lockdown restrictions are relaxed.
The administration process only pertains to Debenhams in the UK.
The retailer said that due to the challenges facing its 11 stores in Ireland, directors anticipate that the UK administrators will appoint a liquidator to Debenhams’ Irish operations.
Debenhams has already suspended trading in its stores across the republic, but now expects the majority to not reopen.
As with staff in the UK, affected Irish colleagues have been placed on furlough under the Irish Government’s payment support schemes for employers.
However, Debenahms said it would now work to support them through the liquidation process.
On the other hand, Debenhams continues to trade online across the UK, Ireland and Denmark, in line with government guidelines, while the lockdown continues.
Customer orders, gift cards and returns are also being accepted and processed normally.
“In these unprecedented circumstances the appointment of the administrators will protect our business, our employees, and other important stakeholders, so that we are in a position to resume trading from our stores when government restrictions are lifted,” Debenhams chief executive Stefaan Vansteenkiste said.
“We anticipate that our highly supportive owners and lenders will make additional funding available to fund the administration period.
“We are desperately sorry not to be able to keep the Irish business operating but are faced with no alternative option in the current environment.
“This decision has not been taken lightly and is no way a reflection on our Irish colleagues, whose professionalism and commitment to serving our customers has never been in question.”
When Debenhams first fell into administration in April last year, it followed a tumultuous period that saw retail tycoon Mike Ashley – who was the department store chain’s biggest shareholder at the time – attempt a boardroom coup before Celine took control.
The CVA, which was approved weeks later, included rent cuts of 25 per cent to 50 per cent on some stores and around 50 stores earmarked for closure.
The first tranche of store closures – 22 sites – took place in January, well before the coronavirus outbreak became a pandemic and sent the UK into a state of crisis.
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