Debenhams enters administration with store closures on the horizon
© ARCHANT NORFOLK 2009
High street giant Debenhams has entered administration.
The chain, which has stores in Norwich, King’s Lynn and Great Yarmouth, chose to hand itself over to lenders instead of accepting a rescue deal from Sports Direct owner Mike Ashley.
The pre-pack administration deal is expected to trigger 50 store closures and job losses.
MORE: Norwich hotel in liquidation after failing to pay staff for “some time”
The restructuring will be brought about through a Company Voluntary Arrangement (CVA), which have been favoured in recent years as shops close stores.
CVAs seek to strike a deal with landlords to negotiate lower rent, with the alternative option being losing a tenant.
FTI Consulting has been appointed to carry out the process.
Administrators have sold the group to a newly-incorporated company controlled by Debenhams’ lenders, including hedge funds thought to include Alcentra, Angelo Gordon and Silver Point Capital.
The change of ownership means that shareholders such as Mike Ashley’s Sports Direct, who holds a 30% stake, will see their investments wiped out.
Under new ownership, Debenhams will have access to £200m in emergency funding.