TROUBLED retailer BHS has won a stay of execution after landlords and other creditors agreed to a restructuring plan that will dramatically slash its rent bill.
The High Street chain of department stores – saddled with £1.3bn debts – yesterday secured around 95% of creditor backing for its CVA – handled by KPMG – which sought to divide BHS’s 164 store portfolio into three main categories, based on the commercial viability and strategic importance of each site.
The lifeline now looks set to protect the majority of its 10,000 staff working across its 164-strong store portfolio.
Will Wright, restructuring partner at KPMG and ‘supervisor’ of the CVAs, said: “The ‘yes’ votes enable BHS to tackle the issue of an unsustainable lease burden which was weighing heavily on the business. While together, the two CVAs comprise only one element of BHS’s plan to turn around its fortunes, they are a critical cog in the mechanism that will put the business in a stronger operational position. The proposal process has given both the company and its creditors the opportunity to agree a compromise that is mutually acceptable.”
Over 75% of creditors had to vote in favour of each CVA to pass the resolutions.
In March 2015, retailer Philip Green announced that he was selling BHS Group Ltd, which he had owned for 15 years – to little-known Retail Acquisitions, itself formed just a few months earlier, for £1.
BHS has also transferred its substantial pension liabilities of £571m into the Pension Protection Fund, the government-supported rescue agency.
Among the CVA proposals were 77 Category 1 premises to be retained at current rents. For the next three years, rents will be paid monthly as opposed to quarterly.
Meanwhile, a total of 47 Category 2 premises have been deemed viable if a rent reduction was obtained. To this end the leases of 21 properties will be retained at a reduced equivalent monthly rent of 75%.
Meanwhile, the leases of 26 properties are to be retained at a reduced equivalent monthly rent of 50% and a reduced equivalent monthly rent of 25% will be paid for a minimum of ten months at a total of 40 Category 3 premises.
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