BHS landlords query long-term future of distressed retailer
Creditors are set to vote on the company voluntary arrangement (CVA) on 23 March 2016
A NUMBER of landlords of troubled retailer BHS have expressed their fears for the department store chain’s future even if a last minute rescue package is thrashed out with creditors.
The buildings’ owners told The Sunday Telegraph the chain’s efforts to negotiate big rent cuts are unlikely to offer a lifeline of any substance.
KPMG, which was recently engaged by the retailer to explore options to shrink its store empire over its “unsustainable” rents, has already prepared a CVA proposal for BHS Limited and BHS Properties Limited.
Creditors are set to vote on the company voluntary arrangement (CVA) on 23 March 2016. Should the proposals get the thumbs up, the chain’s rent bill will plummet.
Around 150 jobs from its 450-strong head office have been placed into consultation, while some 200 management positions are believed to be under review.
The paper said that many of the landlords have accepting rents will need to fall as the only alternative in this instance, is administration. Yet, they also believe that the any rent reductions will ultimately change little for the long-term financial health of the retailer.
Grant Thornton is understood to be looking at ways to ease the burden of the firm on its struggling pension scheme, which is facing a massive £570m shortfall, added further pressures to the chain.
BHS, which was sold by Sir Philip Green, a year ago for £1 to Retail Acquisitions, consortium of investors, has warned creditors they face losses of over £1bn if it fails.
The CVA proposes to divides BHS’s 164 store portfolio into three main categories, based on the commercial viability and strategic importance of each site.