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Select files for second CVA

The administrator for Genus UK, which owns fashion chain Select, has filed proposals for a company voluntary arrangement (CVA), which could result in several redundancies at the retailer if approved. 

Andrew Andronikou, Brian Burke and Carl Jackson of advisory firm Quantuma were appointed as joint administrators on 9 May.

The administrators will oversee the process and continue to operate Select with support from its parent company, as they seek to rescue the business and preserve jobs.

Select employs around 1,800 staff and has around 169 stores, a head office and warehouse facilities, Quantuma said. 

The CVA proposal does not propose the immediate closure of any of Select’s stores. Drapers understands that the retailer is seeking rent reductions. 

No immediate redundancies will be made, but Andronikou said that some redundancies ”may occur even if the proposal is approved”.

The CVA proposals will be put to a creditors’ vote on 11 June.

Andronikou, partner at Quantuma, said: “The business experienced a sharp downturn in fortunes at the end of 2018. Low levels of consumer confidence, together with Brexit uncertainty and volatile currency, have meant that sales remained subdued in early 2019. The inevitable result was a squeeze on cashflow.

“The turnaround plan embarked upon by the management delivered benefits but had not reached sufficient maturity to protect the business from this impact in the market. There remains the opportunity, with the support of its parent company, to bring these to fruition and in doing so return the business to a stable and profitable position.

“As joint administrators, we have arrived at the view that a CVA offers the best outcome for creditors as a whole. The proposal does not outline the immediate closure of any of the company’s stores, and any immediate redundancies, however some may occur even if the proposal is approved.

“If the proposal is not approved, it is anticipated that the company will remain in administration and, in the event a suitable offer is not received to acquire the business, we will have to consider ceasing its trading activities.”

The chain, which is owned by Turkish entrepreneur Cafer Mahiroğlu, resorted to a CVA last April. This enabled it to cut its rents by up to 75% and saved nearly 2,000 jobs.

Mahiroğlu bought the company out of administration in 2008. 

Select has been contacted for comment.

 

Readers' comments (1)

  • Why should landlords have to reduce their rents to 'help' failed businesses? They is no justification for Select to that as an excuse. The problem is squarely with them.

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