Last-ditch rescue saves House of Fraser

HOUSE OF FRASER has escaped collapse after creditors rubber-stamped a resurrection plan that will put 6,000 jobs in jeopardy and result in more than half of its stores being closed.

The department store chain has secured approval for a company voluntary arrangement – a lifeline designed to drive down rents and close sites.

The move will result in 31 of its 59 stores in the UK and Ireland being shut, including its flagship store on London’s Oxford Street, while rents will be slashed on 10 sites.

House of Fraser won the backing of more than 75pc of creditors yesterday despite outrage from landlords over how they have been treated by the company.

Alex Williamson, chief executive, said he was “grateful” for the creditors’ support and belief in the future of House of Fraser.

He said: “This was clearly a difficult decision to take but is, ultimately, the only one to secure our future.”

‘This was a difficult decision to take but is, ultimately, the only one to secure our future’

The CVA is crucial to China’s C.banner International Holdings, which plans to buy a 51pc stake in House of Fraser from majority shareholder Nanjing Cenbest and pump in £70m of new capital to help fund a revival.

Landlords blasted House of Fraser ahead of the vote, claiming they had been forced to absorb the financial pain of the restructuring while the retailer receives fresh money.

Property industry body Revo said the approval of the House of Fraser CVA “underlines that this legislation is completely broken and needs urgent review”. Mark Williams, Revo president, said: “Landlords alone, many of which are pension funds and local authorities, are being made to pay for the mistakes of the business owners, and the Government’s failure to reform the business rates system.”

House of Fraser has joined retailers Mothercare, New Look and Carpetright in resorting to CVAS this year.

A failure to reach a deal with creditors could have sent House of Fraser crashing into administration.