It has been reported by The Guardian that the 242-year-old department store chain, Debenhams, has appointed investment bank Lazard this weekend to oversee a sale process. Hopes are that a buyer is secured before the end of September.
This becomes the thrid time in a year that the struggling retailer has gone through a type of insolvency procedure. Last year it went through a pre-pack administration before a company voluntary arrangement.
FRP Advisory is working alongside the management team as it goes through a ‘’light touch’’ administration, meaning directors are running the business instead of handing over control to administrators completely.
18 stores have been shut, creating a loss of over 1,000 jobs from its shops and London HQ. 124 stores continue to trade after lease negotiations with landlords went underway.
‘’Now that Debenhams has 124 stores in the UK open and is trading ahead of expectations, the administrators of Debenhams Retail Ltd have initiated a process to assess ways for the business to exit its protective administration.’’
Outcomes as a result of this vary from the sale to a third party (of which several buyers have already expressed interest), a potential new joint venture arrangement and even the current owners retaining the business. Liquidation has not yet been ruled out, if further investment is not found.
‘’The administrators will be guided by what delivers the best outcome for creditors.’’
The retailers’ Irish arm has already been placed into liquidation, but liquidation of the whole group is unlikely and would only occur if all other options have been expended.
Debenhams is not the only retailer to be hit by Covid-19. John Lewis and Marks and Spencer’s are also among those hit and having to cut jobs and close stores in order to survive. Debenhams however faced difficulty pre-virus since they already were struggling with a £600m debt pile. This followed by havign to adapt to changing consumer habits brought on from the unprecedented pandemic, encouraging consumers to move to shopping online accelerated its difficulties.