Debenhams vows to continue despite filing for administration

Debenhams, which operates a flagship store at Liverpool One and 142 outlets across the UK, is looking to head off legal action from its creditors with a ‘light touch’ administration. Tony McDonough reports

Debenhams
Debenhams is has filed a Notice of Intent to appoint an administrator

 

Retailer Debenhams is filling for administration insists its stores will reopen once Government coronavirus restriction are lifted.

Debenhams, which operates a flagship store at Liverpool One and 142 outlets across the UK, said it had filed a Notice of Intent (NOI) to appoint an administrator as it looks to head off legal action from creditors which could push the business into liquidation.

Even before the COVID-19 crisis forced it to close all of its UK stores, the company was already fighting for its long-term survival. It has already closed 22 stores this year and plans to close a further 28 in 2021.

The majority of its 20,000 staff are currently being paid under the government’s furlough scheme. Payments to suppliers who continue to provide goods and services during the administration will remain unaffected and be paid to terms.

Debenhams says the filing of an NOI in the UK is a first necessary step in that process to preparing its business to continue trading when the lockdown ends. However, it is not clear if all of the 142 outlets will reopen.

The group is preparing to enter what it calls a “light touch” administration that will see the existing management team remain in place under the direct control and supervision of the administrators.

Its says it has the support of its lenders and they plan to provide the funding for the administration. The group continues to fully engage with all employees and suppliers while operating within a protective arrangement. It is continuing to trade normally online.

The business has appointed Geoff Rowley and Alastair Massey of FRP Advisory to advise in relation to the possible administration. Stefaan Vansteenkiste, chief executive of Debenhams, said: “These are unprecedented circumstances and we have taken this step to protect our business, our employees, and other important stakeholders, so that we are in a position to resume trading from our stores when Government restrictions are lifted.

“We are working with a group of highly supportive owners and lenders and anticipate that additional funding will be made available to bridge us through the current crisis period.

“With their support and working with other key stakeholders, including landlords, pension trustees and business partners, we are striving to protect jobs and reopen as many Debenhams stores for trading as we can, as soon as this is possible.”

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