Chain in desperate search for funds
House of Fraser settles legal test amid administration fears
Jenners: future uncertain as talks falter (pic: Terry Murden)
House of Fraser was offered a lifeline late on Sunday as a group of landlords agreed to drop a legal challenge against its restructuring plans.
The landlords last month filed petitions to the Scottish courts against House of Fraser’s planned company voluntary arrangement, part of a rescue deal which involves 31 of its 59 stores closing and others seeing reductions in rent.
Today the landlords, represented by Begbies Traynor and JLL, said in a statement that an agreement had been reached to head off the legal case.
“The terms of the settlement are confidential but we can confirm that we have agreed to withdraw our legal challenge to the CVA,” said the statement.
It will pave the way for the stores to close and negotiations to continue with new potential investors. However, the future remains precarious as relations with potential saviour Mike Ashley have deteriorated. A big sticking point is said to be House of Fraser’s £400m debt pile.
The chain, which includes Jenners in Edinburgh and Loch Lomond, says it is still in discussions with ‘multiple parties’ for new funding after the Chinese owner of Hamley’s, C Banner, pulled out of plans to invest £70 million in exchange for a 51% stake.
The prospect of administrators being called in has heightened with some analysts arguing that interested parties, who also include Edinburgh Woollen Mill owner Philip Day, would then be able to buy parts or all of the business more cheaply.
Accountancy firm EY is understood to be on standby in case the retailer has to file for administration.
It would be the biggest high-street failure since Woolworths went under with the loss of 30,000 jobs a decade ago.
House of Fraser employs 17,000 the store closures would see 6,000 jobs go with the outlet at the west end of Princes Street, Edinburgh among those shutting.
In the meantime, the company needs working capital to pay its next rent bills and buy stock.
CEO Alex Williamson has admitted that the situation is “unbelievably brutal”. He said that apart from the challenges of the internet and costs affecting the retail sector House of Fraser had “internal issues” which were a legacy of its 169-year-old history.
> The Poundworld discount chain collapsed owing creditors £226.5 million, according to documents circulated by its administrators.