Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Bankruptcy newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (April 6, 2020, 11:02 AM EDT ) British department store chain Debenhams announced Monday that it has given notice it will be entering a "light touch" administration in order to stave off liquidation while its stores remain shuttered by the COVID-19 pandemic.
Debenhams said it had filed a notice of intent with the British courts to appoint an administrator, saying the move is intended to protect the retail chain from legal action that could push it into liquidation while its 142 stores are closed.
"The group has the support of its lenders and they plan to provide the funding for the administration," Debenhams said.
The announcement described it as a "light touch" administration where the current management would remain in place under the supervision of the administrators. Suppliers will continue to be paid and online orders will still be taken and delivered, Debenhams said. Most of its employees are being paid under the government furlough scheme, it said.
"These are unprecedented circumstances and we have taken this step to protect our business, our employees, and other important stakeholders, so that we are in a position to resume trading from our stores when government restrictions are lifted," CEO Stefaan Vansteenkiste said in the announcement. "We are working with a group of highly supportive owners and lenders and anticipate that additional funding will be made available to bridge us through the current crisis period."
The company said it has retained Geoff Rowley and Alastair Massey of FRP Advisory to advise on the administration.
Representatives of Debenhams declined to comment Monday.
Founded in London in 1778, Debenhams currently operates 160 stores in the U.K., Ireland and Denmark and has 56 franchise locations in 19 other countries. The announcement noted that all of its Irish and Danish locations are also currently closed but that it will continue to take online orders from those countries.
The company announced layoffs and the closure of up to 50 stores in 2018 and went into administration in April 2019 with a prepackaged plan that involved a £100 million ($122.8 million) debt-for-equity swap and a new £200 million debt facility. In October it announced it had secured another £50 million on substantially the same terms.
--Editing by Marygrace Murphy.
Update: This story has been updated with additional information and to reflect that Debenhams declined to comment.
For a reprint of this article, please contact reprints@law360.com.
