Debenhams – the UK’s largest department store chain – officially entered administration on Tuesday (April 9).
The department store chain has passed through a pre-pack administration process, which allows a company to sell itself, or its assets, as a going concern, without affecting the operation of the business.
Debenhams had rejected a rescue offer from Mike Ashley’s Sports Direct, meaning that its lenders – which are made up of high street banks (including Barclays and Bank of Ireland) and hedge funds (including Silver Point and GoldenTree) – take control and look to sell it on. As a result, shareholders lose their investments, including Mike Ashley who had a 30% stake in the company.
Debenhams’ 166 stores will continue to trade as normal, including Its Cookshops and Home departments. Around 50 outlets have been earmarked for future closure. This was announced last October for a three to five year timescale, but it is expected that a dozen stores will close next year. There has been no confirmation as to which stores will close, but flagships and recently refurbished stores are considered safe (including Oxford Street, Birmingham Bullring, Manchester Trafford, Glasgow and Stevenage).
Debenhams chairman Terry Duddy commented: “We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.
“In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing.”
* According to new research by KIS Finance, 61% of Brits are worried the high street will disappear completely in the next ten years due to the ever increasing number of big-name store closures.
Top: Debenhams’ 166 branches will continue to trade as usual as its lenders take ownership and look for buyers.
