House of Fraser landlords clear path for store closures after dropping legal challenge
Landlords have cleared the way for House of Fraser’s planned store closures after dropping legal challenge
A legal challenge launched by landlords to block House of Fraser’s planned store closures has been settled out of court, the company announced.
The details of the settlement were not disclosed.
A group of landlords filed petitions to Scottish courts last month after the department store announced it would be shutting 31 of its 59 store as part of restructuring plans.
The petitions challenged House of Fraser’s company voluntary arrangements (CVA). In a statement, a spokesperson for the joint supervisors, KPMG, said the settlement “allows the companies to continue its investment process without the CVAs being subject to the risk of further legal proceedings”.
Mark Fry of Begbies Traynor and Charlotte Coates of JLL, who advised the landlords, said the retail CVA process in the UK has become increasingly misused and prejudiced against landlords and needs correcting, adding that CVAs are not simply a tool to shed undesirable leases for the benefit of equity shareholders.
The news comes after the struggling department store suffered another setback, as hopes of a potential rescue bid from Mike Ashley were thrown into doubt.
Rumours that the Sports Direct founder was interested in throwing the beleaguered retailer a lifeline emerged last week, but reports yesterday suggest that Ashley’s enthusiasm is not as strong as was first suspected.
According to a source close to the matter people representing Ashley have approached House of Fraser twice for details about the situation but he hasn’t followed up on either occasion. This distraction puts the firm in a tricky situation. Ashley’s actions are perplexing. The media has said that the firm is shunning him but that’s simply not true.
It was also revealed last week that Chinese retail group C Banner, the Hong Kong listed shoe retailer which was planning to buy a 51 per cent stake in House of Fraser, called off its plans to invest £70m in House of Fraser, throwing the department store into crisis.
Ashley’s and C. Banner’s withdrawals leave House of Fraser hoping for an offer from Alteri, an offshoot of US hedge fund Apollo, or Philip Day, owner of Edinburgh Woollen Mill.