Womenswear chain Select has outlined the details of its latest company voluntary arrangement (CVA), which was approved earlier this week.
The CVA was given the green light by 87% of the chain’s creditors and landlords at a meeting in Central London.
Select said the approval secures the current employment of its 1,800 employees and preserves the operation of its 169 stores, centralised head office and warehouse facilities.
It comes after the company fell into administration on 9 May. Following this, joint administrators Andrew Andronikou, Brian Burke and Carl Jackson of business advisory firm Quantuma, filed CVA proposals at the High Court on 24 May.
Burke has since revealed to Drapers some of the CVA proposal headlines for Select, which include rent reductions. Creditors have also agreed to accept less than the full amount owed to them.
The proposal divides the company’s leasehold site portfolio into five main categories, determined by the commercial viability and strategic importance of each site.
He said: “The treatment of leases varies from having no impact to rent reductions of 30%, 50% and moving to rent free.
“In addition, the company will look to enter into new leases with landlords where terms had already been agreed prior to the administration. The company will pay landlords’ service charges in full going forward, and all landlord payments will be payable monthly in advance.”
Meanwhile, the amount payable to each “compromised” creditor, and in respect of any landlord arrears, will be 10 pence to the pound (10% of their agreed claim).
Burke added: ”The compromised creditors shall continue to perform their obligations in accordance with the terms of any respective agreements or arrangements with the company without variation.
“The compromised creditors will also benefit from any profit created in the next year that is in excess of £500,000.” He added that 20% of any profit beyond this threshold will be shared among the compromised creditors.
Select filed a notice of intention to appoint administrators at the High Court on 29 March.
This is the second CVA launched by Select in just over a year. The chain entered into a CVA last April, which enabled it to cut its rents by up to 75% and saved nearly 2,000 jobs.
Select’s turnover was £116.7m for the 18 months to 2 December 2017, and it made an operating loss of £15.5m. This compared with a turnover of £81.26m for the 12 months to 4 June 2016, and an operating loss of £1.5m.