Lifeline for BHS as creditors back department store’s turnaround plan

File photo dated The BHS store in London's Oxford Street. Picture: Sean Dempsey/PA Wire

File photo dated The BHS store in London's Oxford Street. Picture: Sean Dempsey/PA Wire - Credit: PA

Embattled retailer BHS has been thrown a lifeline after creditors backed controversial plans to turn around the business.

The department store chain said creditors voted in favour of its company voluntary arrangement (CVA) for BHS Limited, which aims to revive the ailing business by cutting costs and preventing widespread store closures.

The company said the decision to back the CVA for BHS Limited - which represents 125 stores - will ensure the continuation of the group.

It said: 'The success of the CVA of BHS Limited will enable the business to continue the group-wide updated turnaround plan and safeguard the future of BHS, protecting thousands of UK jobs.'

The fashion and homewares retailer said more than 95pc of BHS creditors, including landlords, voted in favour of the CVA for BHS Limited, surpassing the 75pc needed to secure the plan.

However, the company still has to wait to discover the outcome of a second CVA vote today on BHS Properties Limited, which oversees 23 BHS stores.

The CVA deal comes after it was feared the company could plunge into administration and put more than 10,000 jobs at risk if creditors failed to back its plans to shore up the business.

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The firm had put forward CVA proposals which asked landlords to slash the rents by 50pc or 75pc on 47 stores.

It has also told landlords that it needed rents to be reduced 'substantially' on 40 more stores, or risk seeing them close within 10 months.

But the company said it will pay the rent at the current rate on 77 of its 'most viable' stores by making monthly rather than quarterly payments for the next three years.

The future of BHS stores in Norwich, Great Yarmouth and Lowestoft appears to be safe.