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UK's House of Fraser settles CVA challenge from landlords
[LONDON] House of Fraser said on Sunday it had settled with a group of landlords that had challenged the retailer's restructuring plan that includes the closure of 31 of its 59 stores early next year.
The group of landlords had filed petitions to Scottish courts in July against House of Fraser's so-called Company Voluntary Arrangement (CVA).
House of Fraser said in a statement that it had settled the litigation to remove any risk to the discussions with investors that the company was trying to conclude.
The group of landlords said in a statement, "the terms of the settlement are confidential but we can confirm that we have agreed to withdraw our legal challenge to the CVA."
The struggling British department store group's CVA, which allows firms to avoid insolvency or administration, was approved by its creditors in June, paving the way for store closures and up to 6,000 job losses.
The rescue deal has since been thrown into doubt after C.banner, an international retailer which had agreed in May to buy a 51 per cent stake in House of Fraser, cancelled a planned share placing that would have funded the deal and announced a profit warning.
CVAs have also been adopted this year by fellow UK retail strugglers - fashion chain New Look, floor coverings group Carpetright and mother-and-baby goods retailer Mothercare.
A string of UK retailers have either gone out of business or announced plans to close shops in recent months as they struggle with subdued consumer spending, rising labour costs and higher business property taxes as well as growing online competition.