Struggling department store group Debenhams has today appointed advisory firm FRP Advisory as administrators, in order to protect the UK business from liquidation.
However, it is anticipated that it will appoint a provisional liquidator to the Irish operations next week.
Geoff Rowley and Alastair Massey of FRP Advisory’s restructuring practice were appointed as joint administrators on 9 April.
The company said it has entered administration to protect Debenhams in the UK from the threat of legal action that could push the business into liquidation, while its 142 UK stores remain closed in line with the government’s current advice regarding the Covid-19 pandemic.
It said the administrators will adopt a “light touch” while the stores remain closed, working with the existing management team to get the business into a position to re-open and trade as many stores as possible again when restrictions are lifted. Meanwhile, Debenhams continues to trade online across the UK, Ireland and Denmark, in line with government guidelines, while the lockdown continues. Customer orders, gift cards and returns are being accepted and processed normally.
In a statement, Debenhams said: “Regrettably, due to the challenges facing Debenhams Retail (Ireland) Limited, the directors anticipate that the UK administrators will appoint a liquidator to the Irish operations.
“Debenhams has already suspended trading in its 11 Republic of Ireland stores, the majority of which are now not expected to reopen. The affected colleagues have been placed on temporary lay-off under the Irish government’s payment support schemes for employers and we will be working with them to support them through this process. Our customers in the Republic will continue to be able to shop with Debenhams online through.”
In a letter sent to suppliers, Debenhams said: “Unfortunately, our Irish business has had trading challenges which were exacerbated by the impact of Covid-19.”
Meanwhile, the non-executive board members of the parent company Celine Jersey Topco Limited, comprising Kevin Conroy, Dr Beatrice Lafon, Stephen Sunnucks and John Walden, have resigned from the board. They were hired near the end of 2019 to help lead the growth of Debenhams, following the completion of its restructuring, but due to the “unforeseen Covid-19 pandemic” their role will not be required during an administration period.
Stefaan Vansteenkiste, CEO of Debenhams, said: “In these unprecedented circumstances the appointment of the administrators will 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 anticipate that our highly supportive owners and lenders will make additional funding available to fund the administration period.
”We are desperately sorry not to be able to keep the Irish business operating but are faced with no alternative option in the current environment. This decision has not been taken lightly and is no way a reflection on our Irish colleagues, whose professionalism and commitment to serving our customers has never been in question.”
Last month, Debenhams wrote to landlords asking them to consider further rent cuts and store closures as part of its current ongoing CVA, to avoid launching fresh insolvency proceedings.
The department store chain entered administration in April 2019 and officially launched its company voluntary arrangement later the same month. Its CVA proposals, which included rent cuts of 25% to 50% on some stores, were approved last May.
Under the current CVA, Debenhams is expected to close a total of 50 stores, 22 of which shut in January. The retailer has been in continuing discussions with landlords to determine the next tranche of closures, and how to give the rest of its stores a sustainable cost base.