Embattled high street retailer House of Fraser looks set to go ahead with plans to close half its stores, putting around 6,000 jobs at risk, after the company announced it had settled challenges by a group of its landlords to its planned company voluntary arrangement (CVA)
Under the CVA, House of Fraser intends to close 31 of its 59 department stores in January 2019. Landlords, who will see 50% rent reductions for 10 of the surviving stores and a 30% cut for those earmarked for closure, launched a legal bid to stop the proposals on the grounds they were taking the biggest financial hit.
In a statement House of Fraser said the legal challenge, which was due to be heard this week in Edinburgh’s court of session, had been settled over the weekend, but has not made public any of the details or whether the company has offered financial compensation.
The retailer said: ‘House of Fraser is focused on concluding discussions with interested investors as per the original timelines set out by the business and, recognising the risks in and around this litigation, has entered this settlement now to remove any risk to those discussions presented by this legal process.’
Chinese retailer C.Banner, which originally offered to invest £70m in the company in exchange for a 51% share, has now abandoned its plans, meaning House of Fraser is now seeking a new backer.
There have been reports that sportswear retailer Mike Ashley, who has a 11% stake, might be interested but no comment has been made publicly. Philip Day, owner of Edinburgh Woollen Mill, Peacocks and Austin Reed, has also been named as a possible rescuer, as have Alteri Investors and Hilco which specialise in buying up troubled firms with a view to turning them around for a profit.
Report by Pat Sweet
