Debenhams on brink of collapse as it appoints administrators putting 20,000 jobs at risk – but 100 shops will re-open
DENENHAMS is on the brink of collapse after bosses confirm that it is looking to appoint administrators.
The failure of the chain of department stores puts 20,000 jobs at risk.
The household name was already struggling before the impact of coronavirus hit the high street.
The majority of its staff are currently being paid under the government's furlough scheme while all 142 stores remain shut under orders to close all non-essential shops.
The pre-pack arrangement doesn't mean that the chain has entered liquidation but rather it's a move to protect the firm from going bust while stores are shut.
In short, the owners want to push the business into administration and then buy it back debt-free.
Which shops can stay open during UK lockdown?
- Food retailers
- Pharmacies
- Hardware stores
- Corner shops
- Petrol stations
- Shops in hospitals
- Post offices
- Banks
- Newsagents
- Laundrettes
- Pet shops
In a statement, Debenhams said: "Department store group Debenhams today has filed a Notice of Intent to appoint an administrator in the UK.
"This move will protect Debenhams from the threat of legal action that could have the effect of pushing the business into liquidation while its 142 UK stores remain closed in line with the government's current advice regarding the Covid-19 pandemic.
"The group is making preparations to resume trading its stores once government restrictions are lifted."
The firm hopes that the measures will stop landlords and suppliers, who it owes cash to, from handing out winding up notices during the lockdown.
It says that it's preparing to enter a "light touch" administration that will see the existing management team remain under supervision of the administrators.
Debenhams not yet specified who has been appointed administrators although accountancy firm KPMG is understood to be one of those on call to handle the process.
There are no more planned closures other than the 42 that have been previously announced.
Customers can still shop online in the UK, Ireland and Denmark and it hopes the measures will mean than stores can open again once the lockdown is lifted.
The retailer is still accepting returns and giftcards although you may want to hold off purchasing them.
This is because the store doesn't have to accept them if the brand does fall into administration and you could end up out of pocket.
It's also worth bearing in mind that you may face delays with your order as the coronavirus lockdown may have an impact on warehouses.
Debenhams said it has the support of its lenders to enter administration and is engaging with employees and suppliers over the move.
The retailer has been on precarious grounds for some time now, and has closed a number of stores over the past few years as part of a company voluntary arrangement (CVA).
It will be the second time in a year that it has entered into a pre-pack administration, the last time being in April 2019.
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This is an insolvency process for a business to sell its assets before appointing administrations.
This wiped out the value of investments of shareholders, including Sports Direct billionaire Mike Ashley.
The business has continued to remain on the high street and online ever since, but back in January it announced plans to close a further 19 stores.