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May 10, 2019

Debenhams creditors back CVA proposals

By Beth Wright

Debenhams’ creditors have approved its company voluntary arrangement (CVA) proposals in a move that will see the UK department store retailer shutter 22 locations by 2020.

Debenhams announced the details of two proposed CVAs last month, one relating to Debenhams Retail Limited, the main trading entity, and one relating to Debenhams Properties Limited.

It said the actions will help keep Debenhams on a stable financial footing and ensure the future of the company.

The CVA proposals provide a mechanism to restructure the store estate in line with the plan outlined by management in October 2018 to reduce the current 166 UK store portfolio by closing about 50 stores. The first stage of that programme proposes up to 22 store closures in 2020.

Further store closures will be confirmed in due course with the final number dependent on future trading performance; discussions with landlords regarding changes in lease terms and rental levels; and with local authorities regarding business rates.

About 1,200 people work in the stores affected.

In a statement released yesterday (9 May), Debenhams said creditors of the group have approved the CVA proposals, with a majority “significantly above the required threshold of 75% on each proposal”.

“I am grateful to our suppliers, our pension stakeholders and our landlords who have overwhelmingly backed our store restructuring plans,” said executive chairman Terry Duddy. “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.”

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