Creditors approve Debenhams store closure plan

Creditors have given Debenhams their approval for a controversial new insolvency plan this afternoon, paving the way for store closures and rent reductions.

The beleaguered department store chain said that it had acquired “significantly above the required threshold of 75 per cent” on its proposals, setting in motion the group's Company Voluntary Arrangement (CVA).

Terry Duddy, executive chairman of Debenhams said: "I am grateful to our suppliers, our pension stakeholders and our landlords who have overwhelmingly backed our store restructuring plans. We will continue to work to preserve as many stores and jobs as possible through this process. This is a further important step to give us the platform to deliver a turnaround."

A Debenhams spokesperson said that the group had seen "unprecedented turnout from suppliers" and "overwhelming support from landlords".

Jim Tucker, restructuring partner at KPMG and joint supervisor of the CVA, said: "The approval of these CVAs marks an important step forward for Debenhams, which can now put the next phase of its financial and operational turnaround plans in motion.

"As with all CVAs, more than 75 per cent of creditors had to vote in favour in order to pass the resolution. Today’s vote saw the significant majority of all voting creditors choose to approve the two proposals."

The decision comes hours after Celine, which is a consortium of Debenhams investors, said that bids received following the retailer’s administration “were not at the level required to be taken forward”.

Some 50 closures are expected as a result of the CVA, with the identity of 22 stores having already been made public.

Read more: Revealed: Debenhams names 22 stores set to close

With roughly 25,000 employees and 166 outlets, Debenhams is one of the largest high street retailers in the country. 

However, the group collapsed into administration last month following a swathe of profit warnings in the wake of mounting debt, rising competition from online rivals and higher costs.

Last year the chain posted a record annual loss of £491.5m.

Ed Cooke, chief executive at Revo, an organisation that represents the retail community, said: “As Terry Duddy said last week, the CVA will impact only landlords and local councils. So investors, other retailers and the man and woman on the street are suffering as a consequence of historic poor management decisions, that left the business in this precarious situation.

“We will continue to work with government and industry bodies to deliver reform of the CVA regime to stop the damaging impact they are having on towns and cities across the country.”