Future of BHS stores secured as creditors back CVA proposal
- Credit: PA
Embattled retailer BHS was thrown a lifeline yesterday as creditors backed controversial plans to turn the business around.
Creditors, including the landlords of 148 of its stores, voted to approve two Company Voluntary Arrangements (CVAs) designed to revive the business by cutting costs and so preventing widespread store closures.
The company said the immediate future of the firm was secured when 95% of creditors and landlords voted in favour of a CVA for BHS Ltd, which represents 125 stores. A second CVA for BHS Properties Ltd, which covers a further 23 BHS stores, was also voted through.
It has been feared that BHS could plunge into administration, putting more than 10,000 jobs at risk, if creditors failed to back plans to shore up the business.
The firm’s CVA proposals asked landlords to slash the rents by 50% or 75% on 47 stores, with even bigger cuts in respect of 40 more stores which it warned would otherwise close within 10 months.
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However, the company will continue to pay rent at the current rate on 77 of its “most viable” stores by making monthly rather than quarterly payments for the next three years. This includes the BHS branches in Ipswich, Lowestoft and Chelmsford.
BHS chief executive Darren Topp said the decision by the creditors and landlords to back the CVA had given the company the “opportunity to move forward”.
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He added: “It is a tough time for retailers across the UK with huge structural challenges faced by all. However, we have a very credible plan to return BHS to growth and profitability and a revitalised British Home Stores will emerge as we accelerate our turnaround plans.”
Alongside the CVA plans, BHS announced at the beginning of March that it would axe 150 staff from its head office and 220 from its shops in a move to cut costs.
BHS was sold by the billionaire retail tycoon Phillip Green for £1 in March last year after its losses widened to £21million in 2013-14, up from £19m the year before. It was bought by a consortium, named Retail Acquisitions Ltd.