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Debenhams poised to launch CVA this week

Lauretta Roberts
23 April 2019

Debenhams is expected to announce its plans for a CVA on Thursday this week, which will involve the closure of 20 stores by early 2020.

The retailer, which was recently acquired out of administration by a consortium of its lenders, is planning to close 50 of its 165 stores over the next three years and the 20 early closures would form part of this exercise, Sky News reports.

It will also be seeking rent reductions on other stores in its estate via the controversial insolvency process, which high street players are increasingly using as a mechanism to exit lease obligations early and drive down other costs.

Any CVA (Company Voluntary Arrangement) would require creditor approval with a 75% by value majority required to carry the deal. Landlords are expected to oppose the move.

Should the plans for the 20 early store closures go ahead, it would place around 1,000 jobs at risk among Debenhams' direct employees and those of its concessionaires.

The news of the CVA comes days after it was revealed that CEO Sergio Bucher had stood down to be replaced by chairman and retail veteran Terry Duddy, who was appointed as non-executive chairman in January after Sir Ian Cheshire was ousted by the retailer's former largest single shareholder, Mike Ashley of Sports Direct.

Ashley had made several attempts to gain control of the retailer himself offering variously loans of escalating value, a cash bid and an offer to acquire its Danish business, Magasin du Nord. All offers came with the proviso he been instated as CEO himself. Ashley was repeatedly rebuffed and his shareholding of nearly 30% was wiped out when the business was placed briefly into administration.

He has since threatened legal action against the retailer and its advisers and has said his offers would have prevented the administration, which he described as a "national scandal".

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