UK's House of Fraser settles CVA challenge from landlords

C banner International Holdings

05/08/2018 22:07

Aug 5 (Reuters) - House of Fraser said on Sunday it had
settled with a group of landlords that had challenged the
retailer's restructuring plan that includes the closure of 31 of
its 59 stores early next year.
    The group of landlords had filed petitions to Scottish
courts in July against House of Fraser's so-called Company
Voluntary Arrangement (CVA). 
    House of Fraser said in a statement that it had settled the
litigation to remove any risk to the discussions with investors
that the company was trying to conclude.
    The group of landlords said in a statement, "the terms of
the settlement are confidential but we can confirm that we have
agreed to withdraw our legal challenge to the CVA." 
    The struggling British department store group's CVA, which
allows firms to avoid insolvency or administration, was approved
by its creditors in June, paving the way for store closures and
up to 6,000 job losses.
    The rescue deal has since been thrown into doubt after
C.banner  1028.HK , an international retailer which had agreed
in May to buy a 51 percent stake in House of Fraser, cancelled a
planned share placing that would have funded the deal and
announced a profit warning.  urn:newsml:reuters.com:*:nL5N1US6OB
    CVAs have also been adopted this year by fellow UK retail
strugglers - fashion chain New Look, floor coverings group
Carpetright  CPRC.L  and mother-and-baby goods retailer
Mothercare  MTC.L .
    A string of UK retailers have either gone out of business or
announced plans to close shops in recent months as they struggle
with subdued consumer spending, rising labour costs and higher
business property taxes as well as growing online competition.

 (Reporting by Ismail Shakil in Bengaluru
Editing by Alexandra Hudson)
 ((ismail.shakil@thomsonreuters.com; Within U.S. +1 646 223
8780, outside U.S. +91 80 6749 3538; Reuters Messaging:
ismail.shakil.thomsonreuters.com@reuters.net))