Debenhams goes bust with 39 stores to close
DEBENHAMS has officially entered administration for the second time in 12 months, putting the future of the department store chain and 22,000 jobs at risk.
The company has appointed business advisory firm FRP Advisory to oversee the process, after filing a notice of intent to bring in administrators on Monday.
It will be the second time in a year that the 241-year-old retailer has entered administration, the last time being in April 2019.
Debenhams' 142 UK stores are currently closed in line with government guidance following the coronavirus outbreak.
But the retailer said it will work to "re-open and trade as many stores as possible" when restrictions are lifted.
However, its Irish business, which is made up of 11 stores with around 1,400 staff, will cease trading.
High street closures in 2019 and 2020
DEBENHAMS is the latest in a long list of stores to be facing trouble on the high street.
In 2019 and so far in 2020 we've seen:
- Forever21 close 350 stores with its UK branches also at risk
- Jamie Oliver's "Jamie's Italian" chain go bust, alongside his Fifteen and Barbecoa restaurants
- Links of London go into administration putting 350 jobs at risk
- Marks and Spencer close 35 more stores as it pushes forward with plans to axe 145 shops across the UK
- Dozens of Monsoon and Accessorize stores close
- While struggling shoe shop Office has said it "could close shops" as part of restructuring plans
- Fears Pizza Express could be next to go into administration as it "brings in emergency advisers"
- Hairdressing chain Supercuts went into administration in October putting 1,200 jobs and 220 salons at risk
- Maternity and baby retailer Mothercare collapsed into administration in November after 58 years on the high street, putting 2,500 jobs at risk
- Department store chain Beales went into administration in January 2020 with 23 shops and 1,052 jobs at risk
- High end fashion brand Ted Baker said it plans to axe 160 jobs in February
- Mobile phone retailer Carphone Warehose said in March that it'll close all 531 standalone stores in April
Debenhams will continue to offer an online service in the UK, Ireland and Denmark.
Customer orders, gift cards and returns are being accepted and processed normally, Debenhams told The Sun.
The shop confirmed 22 stores have already closed this year.
A further 28 will be shut next year along with the closures in Northern Ireland, bringing the new total of closures to 39.
Meanwhile, the majority of Debenhams' employees in the UK are currently being paid under the government's furlough scheme.
The coronavirus job retention scheme is where employers can ask the government to cover 80 per cent of the salary of furloughed staff if they’re temporarily unable to work.
What is administration?
ADMINISTRATION is when all control of a company is passed to an appointed administrator.
The administrator has to be a licensed insolvency practitioner.
Their goal is to leverage the company's assets and business to repay creditors, so it doesn't necessarily mean the end of a business.
Administration is slightly different to liquidation.
Where administration aims to help the company repay its debts, liquidation is the process of selling all assets and then dissolving the company completely.
Stefaan Vansteenkiste, chief executive officer of Debenhams, said: "The appointment of the administrators will protect our business, our employees, and other important stakeholders, so that we are in a position to resume trading from our stores.
"We are desperately sorry not to be able to keep the Irish business operating but are faced with no alternative option in the current environment.
"This decision has not been taken lightly and is no way a reflection on our Irish colleagues, whose professionalism and commitment to serving our customers has never been in question."
Debenhams has been struggling with tough high street conditions long before the impact of coronavirus hit the UK.
In April 2019, the retailer fell into the control of lenders, a group of banks and hedge funds led by US firm Silver Point Capital.
The move saw 50 stores shut permanently, as well as rents reduced across dozens of other branches.
It also wiped out the value of investments of shareholders, including Sports Direct billionaire Mike Ashley.
While the business has continued to trade, it has been forced to shut several stores along the way.
In more trouble for the high street, Cath Kidston filed a notice of intention to appoint administrators last week.
And last month, Laura Ashley was forced to shut down 70 stores.
In November, Mothercare collapsed into administration after 58 years on the high street.