Debenhams wins approval for CVA

Department store Debenhams has secured approval from creditors and landlords to enter a CVA (Company Voluntary Arrangement) enabling it to close 22 stores by early next year.

A crunch meeting took place today and the retailer, which was last month acquired out of administration by a consortium of its investors, comfortably secured the support of more than 75% of its creditors by value for its plans (which is the threshold for approval).

As a result Debenhams will also seek rent reductions on more than 100 of its stores with a range of 25% to 50% is it is believed. In addition a further 30 stores will be closed in the coming years.

Executive chairman Terry Duddy said of the news: “I am grateful to our suppliers, our pension stakeholders and our landlords who have overwhelmingly backed our store restructuring plans. We will continue to work to preserve as many stores and jobs as possible through this process. This is a further important step to give us the platform to deliver a turnaround.”

Earlier today it was reported that Sports Direct's Mike Ashley would send a representative to the meeting to vote against the proposals. Ashley had held a near 30% stake in the business which was wiped out by the administration.

Prior to the administration Ashley had made repeated attempts to take control of the business himself but was rebuffed each time.

The consortium behind Debenhams (called Celine) also reaffirmed its support for the business this morning, ahead of the meeting, saying they were long-term, committed owners. Following the administration a sale process for the retailer was not but had failed to secure any acceptable bids.