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Retailers fight back against JJB's CVA plan

JJB Sports is facing a backlash from retailers over its plans to undergo a second company voluntary arrangement (CVA).

One of the UK’s biggest retailers has called for an emergency industry meeting to fight back against the sportswear retailer’s plans to close up to 95 stores, according to The Sunday Telegraph. It is threatening to take action against landlords if the CVA is approved.

The retailer told the newspaper: “This cannot be allowed. Every retailer would love to be able to dump their worst performing stores.

“We will call a meeting of all the major retailers to fight back against JJB’s plan. We will tell landlords that if they accept this, we will consider whether or not to pay our rents.”

JJB, which currently has 250 stores, wants to close 45 significantly underperforming stores next year and is putting a further 50 outlets under review for closure within two years. This is the struggling retailer’s second CVA in two years; it shut 140 stores in 2009.

In order for the CVA to go through, the retailer must receive the backing of 75% of its unsecured creditors and 50% of its shareholders.  Some of its landlords have said they would not support the action.

The ailing retailer is using a CVA to secure its future. JJB Sports warned it is in danger of running out of cash by April as its like-for-likes plunged 11.5% in the 5 weeks to January 23. It has already raised £31.5m of capital from shareholders this year to keep the business afloat.

Readers' comments (4)

  • If the law is weak then businesses will abuse it. The days when a loss making company went bust seem to be long gone and with retailers using CVA's it's no surprise.

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  • If it happens it will be one more example of legalised robbery.
    It's about time the government stopped this being able to happen as the suppliers always get short changed.

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  • The whole culture of "going bust" to avoid your debts needs a thorough overhaul. Retailers, suppliers and agents who trade as limited companies abuse their limited liability status to "dump" their debts and who suffers the most? - we, the tax payer as, usually, the Inland Revenue and the VAT man ends up with nothing as the secured creditors take all the assets - remember, when tax and VAT is not paid, we, the other honest and honourable tax payers, have to make up the shortfall!!! How do we stop this? Avoid doing business with entities that "reinvent” themselves after dumping their debts. In this way, the Directors and Shareholders of limited liability companies will think twice about going bust and starting again and, therefore, re-focus their energies on trading out of their difficulties. The most depressing news that I have heard this week is of a well known fashion agent that might be going "bust" for the third time in eighteen months!!! For sure, something's wrong!!!

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  • Agree with previous poster about 'going bust' to avoid debt - it shocking and should be against the law. Its robbery.

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