House of Fraser CVA Plans Approved by Creditors

House of Fraser’s plan to close more than half of its stores has been approved by creditors in a move that could lead to 6,000 job losses.

The department store chain has finally had its insolvency plans approved by creditors. After admitting financial distress earlier in the year, House of Fraser has commenced its plans to jumpstart the business. House of Fraser is the most recent addition to the long list of businesses who have secured a Company Voluntary Arrangement on the high street. This insolvency procedure is considered a lifeline, where rents are reduced and branches are closed, enabling business owners to pay off their debts.

According to the department store’s voluntary arrangement, 31 of its 59 stores in the UK and Ireland will be closed, including its flagship store on London’s Oxford Street. This could put thousands of people out of work, and disgruntled landlords have a 28-day window to legally challenge the contract. As our household brands battle it out on the high street, it is encouraging to see retailers pursue proceedings that don’t result in collapse.

While CVAs provide retailers with a more certain future, they are not the only option for failing retailers. At the Credit Protection Association, we are often approached by firms looking to bypass insolvency. Rather than closing down branches, we encourage our Members to focus on their finances, and investigate ways to improve them. Here at CPA, our debt recovery and credit management products free up the cash to secure a strong financial present, as well as credit check suppliers to secure a strong financial future.

House of Fraser won the backing of more than 75pc of creditors on Friday despite outrage from landlords over how they have been treated by the company.

Chief executive Alex Williamson said he was “grateful” for the creditors’ support and belief in the future of House of Fraser.

A failure to reach a deal with creditors could have sent House of Fraser crashing into administration.

A shift in shopping habits, waning consumer confidence and rampant costs have created a punishing environment for high street retailers.

Approval of the restructure means the 169-year-old retailer has joined retailers Mothercare, New Look and Carpetright, which have all been pulled back from the brink by using CVAs this year.

As high street retailers drop like flies, many are desperate to be rescued. Approaching insolvency professionals and seeking approval for a CVA is one such approach. While voluntary arrangements are currently the most popular, business owners need to know that there are other finance alternatives.

At the Credit Protection Association, the collaboration between all our services, expertise and products not only bring our Members back from the brink but build them up stronger than ever. Our debt recovery services free up cash flow, our credit management products credit check suppliers, and our Late Payment Compensation department uncovers lost potential. Above all, we aim to advise our Members on how to improve their finances and their longevity on the high street.

Here at CPA, we fight to the tooth for our members, particularly those who have suffered through late payment and bad payment practices. We have even created a new department within our company dedicated to getting our members rightly compensated in accordance with the Late Payment of Commerical Debts (Interest) Act 1998. This has unlocked hidden cash and potential for our members and brightened their prospects and confidence on the high street.