House of Fraser saved from collapse after agreeing rescue deal that will cut 6,000 jobs

Retailer will close more than half of its stores early next year after creditors approve turnaround plan

Department store chain House of Fraser has been saved from collapse after creditors approved a rescue deal that will see more than half of its stores close resulting in up to 6,000 job losses.

House of Fraser will undertake the 31 store closures through a Company Voluntary Arrangement (CVA), which will also allow it to secure rent reductions on its remaining shops.

The company announced the plans, which include shutting its flagship Oxford Street branch, earlier this month, saying that the costs of the premises were unsustainable.

The closures are due to happen by early 2019.

The department store was recently taken over by China’s C.banner, which bought a 51 per cent stake in the group from previous owner Nanjing Cenbest, in a deal which was contingent on House of Fraser entering a CVA to sort out its debt problems.

Will Wright, restructuring partner at KPMG and joint supervisor of the CVA, said: “The approval of these CVAs provides House of Fraser with the breathing space it needs to proceed with its proposed operational restructuring plan across a smaller core portfolio of stores.”

The turnaround proposals sparked anger amongst landlords of the branches that will remain open who will have to accept a rent cut.

While a CVA has to be approved by 75 per cent of unsecured creditors, landlords’ voting power is reduced because of the way insolvency rules are applied.

This means that companies can often secure enough votes from trade creditors and others while landlords take much of the pain.

But the retailer’s bosses say they have no choice but to drastically cut costs if they are to save the 169-year-old chain.

House of Fraser chief executive Alex Williamson said: “The CVA proposals have been approved by our creditors and we are grateful for their ongoing support and belief in the future of House of Fraser.

“This was clearly a difficult decision to take but is, ultimately, the only one to secure our future.

“Our focus is on supporting all of our affected colleagues and we are exploring every opportunity available to them, working alongside the Retail Trust and the wider retail community.”

House of Fraser has become the latest retailer to fall victim to tough trading conditions on the high street.

Poundworld began closing down stores on Thursday after calling in the administrators while Mothercare is also trying to enter a CVA.

New Look, Byron, Jamie’s Italian, Carpetright and Prezzo have all entered CVAs since the start of the year.

House of Fraser said the following stores are set to close: Altrincham, Aylesbury, Birkenhead, Birmingham, Bournemouth, Camberley, Cardiff, Carlisle, Chichester, Cirencester, Cwmbran, Darlington, Doncaster, Edinburgh Frasers, Epsom, Grimsby, High Wycombe, Hull, Leamington Spa, Lincoln, London Oxford Street, London King Willam Street, Middlesbrough, Milton Keynes, Plymouth, Shrewsbury, Skipton, Swindon, Telford, Wolverhampton, Worcester.