Debenhams has emerged as the clear frontrunner to buy footwear chain Faith after the business collapsed into administration as a result of being over-leveraged.
The department store chain is thought to be keen to buy the rights to the Faith name and operate it as an own label, similar to the deal it completed with insolvent womenswear retailer Principles last year.
Debenhams, which has 120 Faith concessions in its stores that are thought to generate sales of about £24m, has a change of ownership clause in its agreement with the footwear chain, giving it a significant say in the future of the business. This means that it could terminate Faith’s concession agreement, thought to be the footwear chain’s most profitable operation, if the business was bought by a third party. Market sources said that without the Debenhams concessions the business was a far less attractive proposition.
However, in spite of the Debenhams conundrum, Faith has generated significant interest from outside buyers. Its £14m debt is understood to have been bought by restructuring specialist Hilco last week, just before Mazars was appointed as Faith’s administrators. There are thought to be more than 10 interested parties, including Faith supplier Logo 69 and John Kinnaird, its previous owner.
The deadline for bids is May 7.
Faith, which has 78 stores and employs 1,800 people, was put up for sale last month but failed to find a buyer, and the business collapsed into administration last week.
Mazars is believed to have set aside stock that is owned by Faith’s suppliers under retention of title rights.
A Mazars spokeswoman told Drapers that it was still in the process of “reconciling exactly what took place prior to the onset of the administration”.
Debenhams was unavailable for comment.