Debenhams draws up contingency plans for liquidation
Debenhams’ owners have begun drawing up plans for the liquidation of the department store, which could threaten thousands of jobs.
The retailer is understood to have appointed Hilco Capital, which specialises in restructuring and refinancing firms, as a contingency plan.
Hilco’s appointment was first reported by Sky News and was described over the weekend as “contingency planning” as it looks to secure its future ahead of the crucial pre-Christmas period.
A failure to find a buyer could result in one of the biggest job cuts amid the pandemic, with 14,000 jobs at risk.
Debenhams was taken over by its lenders 16 months ago and collapsed into administration in April after the coronavirus outbreak forced it to shutter shops. Just last week, the department store chain axed 2,500 jobs in a bid to reduce costs.
This month the firm and its hedge fund backers – including Silver Point Capital and GoldenTree Asset Management – launched an auction through investment bank Lazard in a bid to secure new investors.
Debenhams said the trading environment is “clearly a long way from returning to normal” after lockdown restrictions were eased. The latest round of cuts are in addition to the 4,000 redundancies announced since May.
A spokesperson for Debenhams told City PM: “Debenhams is trading strongly, with 124 stores reopened and a healthy cash position. As a result, and as previously stated, the administrators of Debenhams Retail have initiated a process to assess ways for the business to exit its protective administration.”
“The administrators have appointed advisors to help them assess the full range of possible outcomes which include the current owners retaining the business, potential new joint venture arrangements (with existing and potential new investors) or a sale to a third party.”
Hilco Capital, which briefly acquired Oasis and Warehouse before their collapse into administration, worked with Debenhams on the closure of 18 stores earlier this year.