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20 Debenhams stores to be axed in new year

Sky News logo Sky News 23/04/2019 Mark Kleinman, City editor

a group of people walking on a sidewalk: Debenhams is set to launch a Company Voluntary Arrangement © Getty Debenhams is set to launch a Company Voluntary Arrangement The new owners of Debenhams will outline plans this week to shut 20 of its stores early next year, casting a further pall over the UK's crisis-hit high streets.

Sky News has learnt that Debenhams will launch a company voluntary arrangement (CVA) in the next 48 hours that will pave the way for more than 10% of its outlets to close immediately after this year's crucial Christmas trading period.

The closures will be among approximately 50 shops that will shut ‎during a three-year period, leaving roughly 110 to continue trading under the Debenhams name.

The retailer will also seek rent reductions across much of the rest of its estate as part of a long-awaited plan following its brief collapse into administration earlier this month.

An announcement is expected on Thursday.

LONDON, ENGLAND - APRIL 12: Pedestrians walk past the Debenhams flagship store on Oxford Street on April 12, 2019 in London, England. It has been anticipated for some time that the retailer was to fall into administration. As the retailer's lenders take over, all stores currently remain open but with some marked for closure. Businessman Mike Ashley has registered an interest in taking over the company but the future of the department store is still unknown. (Photo by Chris J Ratcliffe/Getty Images) © 2019 Getty Images LONDON, ENGLAND - APRIL 12: Pedestrians walk past the Debenhams flagship store on Oxford Street on April 12, 2019 in London, England. It has been anticipated for some time that the retailer was to fall into administration. As the retailer's lenders take over, all stores currently remain open but with some marked for closure. Businessman Mike Ashley has registered an interest in taking over the company but the future of the department store is still unknown. (Photo by Chris J Ratcliffe/Getty Images)

Sources said on Tuesday that the launch of the CVA - a controversial insolvency mechanism being used by embattled retailers - would pave the way for a creditor vote next month.

They added that some of Debenhams's landlords were likely to oppose the CVA, with 75% of creditors by value required to pass the vote.

The launch of the next phase of the chain's restructuring comes days after it announced that chief executive Sergio Bucher would step down.

Well over 1,000 jobs are likely to be put at risk by the initial spate of store closures, according to analysts.

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Debenhams' new owners - a group of banks and hedge funds - have appointed Stefaan Vansteenkiste, a managing director at the professional services firm Alvarez & Marsal, as its chief restructuring officer.

A financial restructuring that will convert around £100m of Debenhams's debt to new equity is also part of the new owners' plans.

Lazard, the investment bank which advised Debenhams's board in the period before it called in administrators, is expected to advise on a sale process in the near term.

The department store chain's quickfire collapse sparked a furious riposte from Mike Ashley, the boss of its biggest shareholder, Sports Direct International‎.

Mr Ashley described the administration of Debenhams as "a national scandal" and called for it to be reversed.

Soccer Football - Premier League - Newcastle United v Leicester City - St James' Park, Newcastle, Britain - September 29, 2018  Newcastle United owner Mike Ashley  REUTERS/Scott Heppell  EDITORIAL USE ONLY. No use with unauthorized audio, video, data, fixture lists, club/league logos or "live" services. Online in-match use limited to 75 images, no video emulation. No use in betting, games or single club/league/player publications.  Please contact your account representative for further details. © Thomson Reuters Soccer Football - Premier League - Newcastle United v Leicester City - St James' Park, Newcastle, Britain - September 29, 2018 Newcastle United owner Mike Ashley REUTERS/Scott Heppell EDITORIAL USE ONLY. No use with unauthorized audio, video, data, fixture lists, club/league logos or "live" services. Online in-match use limited to 75 images, no video emulation. No use in betting, games or single club/league/player publications. Please contact your account representative for further details.

Sports Direct had submitted a blizzard of alternative offers that it says would have enabled Debenhams to avoid its brief in‎solvency.

Debenhams and KPMG, which will oversee the CVA, declined‎ to comment.

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