House of Fraser axes stores and 6,000 staff
CREDITORS yesterday backed plans to close more than half of House of Fraser’s department stores with the loss of up to 6,000 jobs.
More than 75 per cent voted for the restructuring deal, known as a company voluntary arrangement (CVA), which will see 31 of the 59 stores close and rents reduced on 10 of those remaining open.
This was despite opposition from high street landlords, unhappy at having to shoulder the burden of financial losses.
They now have 28 days to consider whether to make a legal challenge against the process and “will be looking at their options closely”, according to their advisers.
Mark Fry of corporate recovery firm Begbies Traynor said: “It is disappointing that the CVA has been agreed without proper engagement with the landlords, many of whom manage the pensions and investments of the man in the street, despite them having so much at stake through the process.”
British Property Federation chief executive Melanie Leech said: “Clearly this has been a fractious CVA.
“Property owners have become increasingly exasperated with a process that sees their pensioner investors hit, while most other creditors take no pain.
“It has exposed the dark arts of how CVA votes are put together and the lack of fairness and transparency that occurs in such cases.
“Ultimately, confidence is at an alltime low in the process and that needs to remedied as there will be more CVAs. We have called for an urgent government review.”
The restructuring paves the way for funding by C.banner, the Chinese owner of Hamleys which has bought a 51 per cent stake in House of Fraser. All the stores earmarked for closure are expected to trade until early next year.
House of Fraser CEO Alex Williamson said: “This was clearly a difficult decision to take but is, ultimately, the only one to secure our future.
“Our focus is on supporting all of our affected colleagues and we are exploring every opportunity available to them working alongside the Retail Trust and the wider retail community.”