Debenhams files notice of intent to appoint administrator

Embattled department store chain Debenhams has filed a notice of intent to appoint an administrator, it announced on Monday, in a move to protect it from the threat of legal action that could have pushed it into liquidation.

The company, which is privately held by a consortium of investors known as ‘Celine’, said its 142 stores in the UK remained closed in line with the government’s current advice over the Covid-19 coronavirus pandemic.

It said it was preparing to resume trading its stores once government restrictions are lifted, and explained the filing of the notice as a “first necessary step” in that process.

The group said it was preparing to enter a “light touch” administration, which it said would see the existing management team remain in place under the direct control and supervision of the administrators.

Debenhams said it had the support of its lenders, which reportedly planned to provide funding for the administration.

It said it was also engaging with all of its employees and suppliers, while operating within a protective arrangement.

The majority of its employees in the UK were currently being paid under the government’s furlough scheme, given the temporary closure of its stores.

Payments to suppliers which continued to provide goods and services during the administration would remain unaffected, and be paid to terms, Debenhams said.

Debenhams added that it was still trading online across the UK, Ireland and Denmark, in line with government guidelines, amid the various lockdown restrictions in those countries, with customer orders, gift cards and returns being accepted and processed.

The board said Debenhams in the Republic of Ireland was being affected by similar trading restrictions as the UK, with employees furloughed under the Irish government scheme.

Its ring-fenced Danish business, Magasin, was also affected by store closures, but was continuing to trade online with the benefit of its “modern and highly automated” distribution facility.

The group has said it had appointed Geoff Rowley and Alastair Massey of FRP Advisory to advise in relation to the possible administration.

“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,” said chief executive officer Stefaan Vansteenkiste.

“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.

“With their support and working with other key stakeholders, including landlords, pension trustees and business partners, we are striving to protect jobs and reopen as many Debenhams stores for trading as we can, as soon as this is possible.”