House of Fraser settles challenge from landlords to boost rescue hopes

House of Fraser will continue with plans to close 31 of its 59 stores next year after settling a legal challenge from landlords.

The agreement – the terms of which are confidential – removes one obstacle as the troubled department store seeks a rescue deal.

The chain owns Wolverhampton’s iconic Beatties store and operates House of Fraser department stores in Telford and Shrewsbury. All three are now set to close in the next six months, along with the former Rackhams shop in Birmingham.

The company's store closure programme was announced in June but soon thrown off course when landlords issued a legal challenge, saying they were unfairly prejudiced by the process.

The landlords had argued slashing rents on remaining stores was unfair to them, putting the rescue plan in jeopardy.

House of Fraser in Shrewsbury

Creditors for House of Fraser approved the company voluntary arrangement (CVA), but landlords started legal action filed in Scottish courts.

A spokesperson for the Joint Supervisors of the House of Fraser CVAs said: "The Joint Supervisors can confirm that there has been a settlement to the legal challenge to the House of Fraser CVAs.

"This commercial settlement has been reached to avoid the costs of litigation, and allows the companies to continue its investment process without the CVAs being subject to the risk of further legal proceedings."

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House of Fraser said it was now "focused on concluding discussions with interested investors" and the out-of-court settlement with the landlords had removed "any risk to those discussions".

Potential suitors for the chain include Philip Day, owner of Edinburgh Woollen Mills, and whose retail empire includes Peacocks, Jane Norman, Austin Reed and Jaeger.

Sports Direct boss Mike Ashley, who already owns an 11 per cent stake in House of Fraser, also approached the chain in July over a potential investment deal.

Mr Ashley is understood to have not communicated with House of Fraser's financial advisers' Rothschilds since then, and it is believed he is unlikely to proceed with a rescue deal due to concerns over the chain's pension funds.

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Beatties is lined up to shut in the new year along with the former Rackhams in Birmingham and branches in Telford and Shrewsbury.

House of Fraser is one of a number of high street stores to seek controversial CVAs amid a rise in closures and failures.

Retailers have been hammered by Brexit-fuelled inflation, soaring business rates and falling consumer confidence.

Toys R Us and Maplin collapsed earlier this year, while the likes of Prezzo, Byron and Jamie's Italian have shut restaurants and culled hundreds of jobs.




Date: 06 August 2018 | Source: Shropshire Star

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