0800 644 6080
Call FREE from Landline and Mobile
Est. 1989

Retailer BHS Heads for Company Voluntary Arrangement in Turnaround Bid

Reviewed: 4th March 2016

British Home Stores (BHS) looks set to enter a Company Voluntary Arrangement (CVA) as part of a major overhaul designed to reduce the retailer’s overheads and re-establish its business on a firmer financial footing.

Expectations are that the process will see the department store chain, which employs close to 11,000 people nationwide, shed several hundred jobs across its operations with the potential for dozens of its outlets to be closed and further jobs to be lost.

At the heart of the CVA and the turnaround plan from the point of view of BHS’ investment group owners Retail Acquisitions will be reaching agreements with landlords to reduce their rents.

The planned restructuring of the business will see rent reductions sought in relation to 87 outlets, with very substantial rent reductions to be sought in relation to 40 of those stores.

BHS currently has 164 stores around the UK with only 77 of them being left unaffected by the CVA and negotiations with landlords.

“The company needs to secure at least 75 per cent creditor approval for these CVAs,” explained Will Wright, a restructuring partner at KPMG, who is supervising the CVA and advising BHS’ owners. 

“While the company’s store estate is located across favourable retail locations, a number of these leases are unsustainable, predicated on terms which were originally negotiated some decades ago,” he said.

Darren Topp, BHS’ chief executive, said in a statement: “The CVA proposal that we have announced today is a necessary milestone in resetting British Home Stores to ensure its long term future as an iconic British retail brand.”

“Some of our stores are loss making as we are being charged rents that are too high relative to today’s market. The CVA will address this issue.”

Pre-tax losses worth around £85 million were recorded for BHS in the most recent tax year, with its former owner Sir Philip Green and his Arcadia group selling the business last year to Retail Acquisitions for a sum of just £1.

A deal between the company’s new owners and the specialist lenders of Grovepoint Credit last year resulted in the creation of a £65 million debt facility that Retail Acquisitions is hoping will help it turn around what remains one of the better known names on the British high street. 

Who we help
  • Company Directors
  • Finance Directors
  • Sole Traders
  • Accountants
  • Small Businesses
  • Large Businesses
  • Partnerships
Contact our team
Jonathan Munnery
Gillian Sayburn
Julie Palmer
or Find your Nearest Office

Here at Real Business Rescue we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY

Business Rescue Advice for Directors
Free Guide for Limited Company Directors
Business Rescue Advice for Directors
  • How to manage company cash flow problems
  • Advice on dealing with HMRC
  • Understanding rescue and closure options
  • And much more...
Free Guide Download
Desling with your Insolvent Clients
Business Rescue Guide for Accountants
Dealing with your Insolvent Clients
  • Helping you advise insolvent clients
  • Spotting signs of client distress
  • Exploring business rescue options
  • And much more...
Free Guide Download
Our numbers speak for themselves
Number of UK Offices
Directors Helped
Licensed Insolvency Practitioners