In Brief

Debenhams files for administration due to lockdown woes

Struggling retailer with 22,000 staff also went into administration last year

Debenhams is set to call in administrators after the struggling chain was forced to close all its outlets due to the coronavirus outbreak.

The retailer, which has 22,000 staff and was rescued by its lenders after collapsing into administration only one year ago, said: “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.”

Boss Stefaan Vansteenkiste said “the group is making preparations to resume trading its stores once government restrictions are lifted”. However, Vansteenkiste has not said how many of its 142 shops would reopen after the lockdown.

–––––––––––––––––––––––––––––––For a round-up of the most important stories from around the world - and a concise, refreshing and balanced take on the week’s news agenda - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

The company’s struggles have worsened since the coronavirus lockdown began. With more than £600 million of debt, Debenhams wrote to landlords asking for a five-month rent holiday and reportedly asked suppliers for a 31-day delay to some payments as it seeks to conserve cash.

An insider told Sky News that there was a realistic prospect that Debenhams’ clothing suppliers would take legal action against the company for deferring invoice payments during the lockdown.

The Guardian says that if Debenhams does collapse into administration it could “pave the way” for Mike Ashley’s Frasers Group, formerly known as Sports Direct, to revive its interest in the chain.

Last April, the company went into administration after lenders rejected a last-minute offer from Sports Direct to plough £150m into the chain's finances to keep it afloat.

Analysts say the latest development is not unexpected. “Debenhams has been in financial difficulties for a while so this doesn't come as a major surprise,” said Julie Palmer, regional managing partner at restructuring firm Begbies Traynor.

“But it will leave its 20,000 plus strong workforce in a precarious position who will struggle to get new employment during the on-going uncertainty.”

Recommended

Covid-19: everything you need to know about coronavirus
coronavirus.jpg
In Depth

Covid-19: everything you need to know about coronavirus

The great reopening 
Shoppers get their retail fix on Oxford Street in London on 12 April
In Depth

The great reopening 

Charity shops enjoy bumper sales but donors warned to ‘think before giving’
British Heart Foundation charity shop
Business Briefing

Charity shops enjoy bumper sales but donors warned to ‘think before giving’

UK’s economy grew by 0.4% in February as EU exports rebound
The UK’s construction sector grew by 1.6% in February 2021
Business Briefing

UK’s economy grew by 0.4% in February as EU exports rebound

Popular articles

15 most expensive English towns outside of London
Virginia Water, Surrey
In Depth

15 most expensive English towns outside of London

Woman wants Prince Harry arrested for not marrying her
Tall Tales

Woman wants Prince Harry arrested for not marrying her

TV crime dramas to watch in 2021
Sally Lindsay stars in Channel 5’s seaside thriller Intruder
In Review

TV crime dramas to watch in 2021