Troubled retailer BHS given a lifeline by creditors

There was some much-needed good news for troubled department store chain BHS on Wednesday afternoon as 95% of its creditors approved a deal to cut the rent bill for the company's UK stores.

Landlords and other creditors of the High Street retailer approved its company voluntary arrangement at a meeting in a west London hotel.

A CVA, which is seen as an alternative to insolvency and requires 75% approval, allows a company with financial difficulties to reach a deal with creditors, including landlords, to reduce its liabilities.

BHS sought the voluntary arrangements for creditors to accept lower rents in order for it to keep its struggling business afloat.

The loss-making retailer, which was sold by billionaire tycoon Sir Philip Green to Retail Acquisitions for just £1 last year, currently has debts in excess of £1.3bn, which include a £571m pension deficit.

Although Wednesday's approval will keep the company's 10,000 staff safe for now, BHS still needs to restructure its pension scheme and raise £100m to fund its turnaround.

"The success of the CVA of BHS Limited will enable the business to continue the group-wide updated turnaround plan and safeguard the future of BHS, protecting thousands of UK jobs," BHS said.

"This vote is a significant milestone for the group and the renegotiated rents at BHS’ loss-making stores will drastically improve the financial viability of BHS, giving the group the necessary financial flexibility to invest in the future of the company through resetting, refocusing and rebuilding the business."