Crisis talks for House of Fraser as department store teeters on the brink of administration
PUBLISHED: 15:40 01 June 2018 | UPDATED: 17:20 01 June 2018
House of Fraser is locked in last-ditch talks with its lenders as the retailer scrambles to avoid a calamitous administration that would put thousands of jobs at risk.
The department store chain, which has a flagship store in Norwich, hopes to launch a store closure programme next week, but sources have said the company is drawing up drastic back-up plans.
House of Fraser’s collapse would endanger 17,000 staff across its 59 stores.
The group is racing to secure £70m in fresh funding through a proposed rescue plan.
However, if the money does not materialise, House of Fraser could file a notice to appoint administrators within days, one source said.
House of Fraser is holding crisis talks with HSBC and the Industrial and Commercial Bank of China over the weekend, after the lenders expressed concern about the business’ bid to secure the money from a new investor.
The lenders, advised by EY, are demanding assurances that Hamleys owner C.banner will follow through on a promise of new funding when it takes a majority stake in the business.
C.banner has pledged the cash injection on the condition the retailer pushes through a sweeping store closure programme via a company voluntary arrrangement (CVA).
However, the store closures require approval from House of Fraser’s landlords, who have not been supportive of the CVA.
House of Fraser has been holding talks with landlords in a desperate bid to secure their approval, fearing they could vote against the CVA.
House of Fraser needs 70% of creditors to back the plan, and has also been seeking the approval of the Pensions Regulator.
It is thought that about 20 House of Fraser stores could close if the CVA goes ahead.
A House of Fraser spokesman said: “Constructive engagement continues between all parties.”