Creditors have approved a proposed Company Voluntary Arrangement for The Original Factory Shop (TOFS).
The plans will see 32 stores and a distribution centre close, and new investment ploughed into the troubled firm by its private equity owner Duke Street.
According to a spokeswoman the CVA approval promised to put ”the business on a much stronger, financial footing to deliver the turnaround plan. While this is a tough measure, reflective of the broader retail environment, it is good news that TOFS will be in pole position to push ahead with their new journey to growth strategy.”
TOFS will move to monthly rents and rent reductions will be active from 1 August.
Last month Drapers revealed the list of stores earmarked for closure.
The document seen by Drapers showed TOFS posted a 3.7% fall in revenues for the year to 30 April to £183.2m. EBITDA stood at £6.2m, down from £12m in 2017.
The CVA document stated that the company had net liabilities of £286m, which would be reduced to £230m if some of the loan notes are written off, and had been underperforming “for some time”.
The company had stated that: “The business has been underperforming for some time but this has become more marked in the past 12 months. For the year ended 31 March 2018 (FY18) the company’s turnover was 4% behind that for the year ended 31 March 2017.
“Trading performance has deteriorated significantly during 2017 and early 2018 and this has led to liquidity pressures and breach of banking covenants. The decline in performance has been the result of both the macro-economic factors and business-specific issues affecting the company.”