Mon, 28 May 2018 | ADMINISTRATION
House of Fraser is expected to close up to half its UK stores as part of its Company Voluntary Agreement (CVA), which will be implemented from June.
According to the firm's reports, it plans on closing around 30 of its 59 stores across the country as part of the CVA, which is a form of business insolvency that is likely to result in much needed rent cuts for the group on the remainder of the stores.
Although House of Fraser currently refuses to comment, the news come soon after Retail Sector announced the department store chain is struggling to receive approval for the CVA from its landlords, who have criticised plans for rent reductions.
In fact, sources have suggested that the CVA is yet to be put to a vote amongst landlords, who could overturn the insolvency decision if they feel another option such as the full or part sale of the business would be more appropriate.
According to the British Property Federation (BPF) and Revo, which represents landlords and retailers, have added to these concerns, suggesting that members are increasingly likely to reject CVAs as they become more commonplace on the high street.
Commenting on the CVA, Ian Fletcher, director of real estate policy at the BPF, argued that House of Fraser had not followed best practice. "Announcing the CVA via a statement on new investment, whilst helpful to the overall continuation of the business, is highly insensitive when you are asking property investors to absorb large losses."
He said: "We think any discussions on this CVA will therefore be awkward and any support for the CVA given grudgingly."
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