Written by: Keith Tully
Reviewed: Wednesday 24th April, 2019
The department store chain Debenhams could close 20 of its UK stores in the early part of next year as part of a Company Voluntary Arrangement (CVA) plan that is reportedly being put together.
KPMG is understood to be overseeing the CVA process in collaboration with the new owners of Debenhams who acquired the business and its assets immediately after it entered administration earlier this month.
Debenhams has already said that it intends to close down 50 of its 165 shops over the course of the next three to five years.
Details of the closures planned for early 2020, soon after the Christmas trading period, are expected to be revealed by Debenhams’ owners in the coming days.
A CVA, if approved by Debenhams’ creditors, could see significant rent reductions secured in relation to the stores that are left to remain open and operational around the country.
At least a three-quarters majority of creditors would need to back the CVA plan for it to get the green light, with Sky News reporting that a vote on the matter could be held at some point in May.
In addition to putting their CVA plans together, Debenhams’ executive team is faced with the task of finding a new permanent chief executive, with the man previously in the role, Sergio Bucher, having recently announced his resignation.
Chairman Terry Duddy has taken over as CEO on an interim basis while a permanent replacement for Mr Bucher is sought.
“Debenhams now has a clear path towards a viable and sustainable future and we have Sergio to thank for that,” Mr Duddy said in a statement.
The future for Debenhams could involve a further sale of its business and assets to new owners after the completion of its pre-pack administration sale to its creditors in early April.
The pre-pack deal is reported to have included provisions that could pave the way for another sale, with the administration process having made possible a £200 million refinancing plan.
Around a thousand jobs could be put at risk if 20 Debenhams stores were to be closed in the early part of next year.