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Exclusive: House of Fraser's secret £1m deal with landlords

House of Fraser struck a £1m “sweetheart” deal with landlords to drop their legal challenge to its company voluntary arrangement (CVA) days before it went into administration, Drapers can reveal.

Drapers understands the five landlords agreed to receive £200,000 each (£20,000 up front and £180,000 once the CVA had been implemented) to withdraw their case as part of a confidential out-of-court settlement on 5 August.

The five landlords’ legal action against House of Fraser’s proposed store closures and rent cuts was due to be heard in the Scottish courts today (14 August) in what was widely seen as a test case for the CVA process.

However, the subsequent collapse of HoF into administration just days later on 10 August means the outstanding payment totalling £900,000 to the landlords will now not be made.

The CVA is also now void as a result of the administration.

New owner Mike Ashley, who bought the 169-year-old store chain in a pre-pack deal, has appointed CBRE to negotiate on its behalf with HoF landlords over the future of the stores.

One property expert said Ashley could close stores “within weeks” but may decide to keep some stores previously earmarked for closure.

He said: “It will be intriguing to see what [Ashley] does. Oxford Street flagship stores come up once in a lifetime, so he may want keep it. Sports Direct may decide to trade them all for couple of weeks, then make a decision on which stores [Ashley] will walk away from.”

Mark Fry of Begbies Traynor and Charlotte Coates of JLL advised the landlords that challenged the HoF CVA, Luna Altrincham, Autumn Properties and Eden Commercial, and two unnamed pension funds.

HoF administrator EY declined to comment.

 

 

 

 

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