The proposed Company Voluntary Arrangement (CVA) of Flannels has been approved by creditors, securing the future of the designer mini-chain.
Some 89% of creditors by value of debt voted in favour of the proposal, which needed a 75% rate of approval to go through. Of the 94 creditors who had a vote, just one voted against the arrangement.
Three stores in Liverpool’s Met Quarter, Birmingham Bullring and on 55 King Street in Manchester will be closed as part of the CVA. The remaining 12 stores will continue to trade but landlords have agreed to a 20% discount of the principal rent in 2010 and a 10% discount in 2011.
“We have worked hard to balance the interests of all creditors as part of this process. The proposal allows the business to restructure to a size that mirrors the extraordinary trading conditions that retailers are currently facing.”
Neil Prosser, managing director, Flannels
Under the terms of the proposal creditors and members of the company will receive approximately 60p in the pound. Suppliers with retention of title rights will receive 70p in the pound.
Flannels appointed financial services firm Deloitte to handled the proposed CVA in November after a troubled trading climate and decline in consumer spend hit the 15-store retailer.
Flannels managing director and owner Neil Prosser said: “The result of the voting demonstrates the fairness of our proposal that was put to creditors. We have worked hard to balance the interests of all creditors as part of this process. The proposal allows the business to restructure to a size that mirrors the extraordinary trading conditions that retailers are currently facing. Being able to restructure will preserve the ongoing viability of our business.”
Bill Dawson, partner in the Reorganisation Services practice in Deloitte’s Manchester office, said: “This is good news for creditors as the CVA allows the Company to remain as a going concern and maintain its trade. It gives the company and its stakeholders greater certainty as it enters the Christmas trading period and greater job security to around 165 employees.”
“The CVA demonstrates that seeking advice at a sufficiently early stage can allow time for companies to develop and implement a successful restructuring plan.”