Debenhams has won emphatic approval from its creditors for its rescue restructure plan, that will close at least 22 stores and force through rent cuts on many others.
Landlords and other creditors, such as clothing suppliers, approved the closures which form part of two company voluntary arrangement (CVA) deals Debenhams’ new owners have said are necessary to prevent the business collapsing. A CVA is a type of insolvency procedure and Debenhams received 95% support for one plan and 97% for the other.
The retailer’s chairman, Terry Duddy, told the meeting: “We did not want to be here … but the alternative has been stark.”
He said he was confident Debenhams had a future if the restructuring plan went ahead.
Duddy had urged creditors to back the scheme, saying a vote against the CVA would have been “a vote to move Debenhams into administration”. He told them : “This is not the time for a protest vote.. this is time for a vote for Debenhams.”
Last month, the retailer was taken over by a syndicate of banks and hedge funds it owed money, foxing an attempt by Mike Ashley’s Sports Direct to take control.
Sports Direct took part in the CVA vote as the retail group, which also owns the House of Fraser department store chain as well as a string of sports and fashion stores, was owed more than £500,000 by Debenhams at the time the CVA was tabled.
Ashley’s representative, Roger Hutton of the Sports Direct adviser Clarion, was one of the first to arrive and one source inside the meeting said he had asked a number of questions, including what had happened to a £40m shor-term loan given to the company by its lenders in February.
One person at the meeting said there had been an “intense” period of questions, mostly to do with property matters, lasting about an hour before the vote. The meeting was attended by about 80 people.
One long-term supplier said: “I feel Debenhams has got the right plan.” She said the CVA, combined with the prepack administration which led to Debenhams’ lenders taking control last month, would make the business stronger. “I am really hoping for the best,” she added.
Another said it would have been “very dangerous for Debenhams and for high streets” not to have back the CVA, adding: “Landlords are going to take a bit of pain but not doing it [would have worse consequences].”