Debenhams mulling even more store closures - report

Apr 1, 2020
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There’s speculation that Debenhams could be thinking of adding more stores to its list of closures and possibly entering another company voluntary arrangement. If so, it would come less than a year after it seemed to be back on an even keel following its takeover by a consortium of its lenders and the approval of its earlier CVA.

Will even more Debenhams stores close? - Photo: Sandra Halliday

The BBC reported that the company is “having to revise its restructuring plans” in the face of the unprecedented retail situation at present and several scenarios are being considered. 

The firm is currently in discussions with landlords, talks that have been going on since before the coronavirus crisis, but that have now become more urgent. The BBC also said that the department store chain hasn't commented on the situation.

The company became the property of its lenders last spring as several years of tough retail conditions took their toll. Those lenders had been supportive since then and had made more funding available. But the report claimed that the lenders are unwilling to extend more credit to Debenhams unless they have guarantees that its landlords will agree to further concessions, such as an extended rent and service charge holiday.

The report raised the prospect of another CVA to facilitate any new agreements with landlords and said even more of its shops than originally planned could be shut down. 

Landlords are themselves in a difficult position with a succession of them in recent weeks saying they've only received a small percentage of the rent that was due to them at the end of this month. And some, like Intu, have even bigger problems, such as a crushingly large debt load that they're trying to reduce at the most difficult possible time. Many are also trying to support smaller tenants with special measures and this could mean that some landlords are unwilling to concede much to Debenhams.

One told the BBC Debenhams was asking for a lot but it understood why as it was simply trying to get the business through the crisis and out the other side.

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