LONDON (Reuters) – The creditors of struggling British department stores group Debenhams on Thursday backed a restructuring plan that will see 22 stores closed next year, putting 1,200 jobs at risk.
Executive Chairman Terry Duddy said: “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.”
Debenhams’ lenders took control of the retailer last month in a rescue deal which wiped out the company’s shareholders, including Sports Direct boss Mike Ashley, who had tried to buy the whole group.
Once the country’s biggest department store chain, Debenhams was hit by a sharp slowdown in sales, high rents and ballooning debt.
Administrators, appointed after Ashley’s last-ditch bid to rescue the company failed, sold the group to its creditors including British banks and U.S. hedge funds.
Earlier on Thursday, the investor consortium said it would retain ownership after bids for the chain fell short of the level they wanted.
They will restructure the chain using company voluntary arrangements (CVAs), which allow retailers to avoid insolvency by offloading unwanted stores and securing lower rents on others and reach a compromise with creditors.
The CVAs ultimately aim to reduce Debenhams’ current 166 UK store portfolio by closing about 50 stores, with 22 set to shut their doors in 2020.
(Reporting by Paul Sandle. Editing by Andrew MacAskill; Editing by Elaine Hardcastle)