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Debenhams set to plunge into administration

By PA News
Debenhams is set to fall into administration for the second time in a year (Stefan Rousseau/PA)

Department store Debenhams is on the brink of administration for the second time in a year, the company has confirmed.

With 142 stores closed and the majority of the 22,000 staff on furlough, the current owners want to push the business into administration then buy it back debt-free.

Debenhams explained: “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 company filed a notice of intent to appoint administrators from FRP Advisory to oversee the process.

It added that it is making preparations to open again once Government restrictions are lifted.

“The group is preparing to enter a ‘light touch’ administration that will see the existing management team remain in place under the direct control and supervision of the administrators,” it said.

The majority of its employees in the UK are currently being paid under the Government’s furlough scheme, after its stores closed following the shutdown of non-essential shops.

It added that it continues to trade online across the UK, Ireland and Denmark and customer orders, gift cards and returns are being accepted and processed normally.

Debenhams has been in financial difficulties for a while so this doesn’t come as a major surprise
Julie Palmer, partner at Begbies Traynor

Debenhams said it has the support of its lenders to enter administration and is engaging with employees and suppliers over the move.

The historic retailer has closed 22 shops in recent months as part of plans to shut 50 sites and bring its total estate to 110.

The announcement comes amid reports that Cath Kidston is also set to appoint administrators, while rival Laura Ashley has said it will permanently close 70 stores after sliding into administration.

Julie Palmer, partner at Begbies Traynor, said: “Debenhams has been in financial difficulties for a while so this doesn’t come as a major surprise, but it will leave its 20,000-plus strong workforce in a precarious position who will struggle to get new employment during the ongoing uncertainty.”


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