House of Fraser in crisis talks with lenders as it seeks to avoid collapse
The department store’s lenders are demanding assurances of fresh funding.
House of Fraser is locked in last-ditch talks with its lenders as the retailer scrambles to avoid a calamitous administration that would put thousands of jobs at risk.
The department store chain hopes to launch a store closure programme next week, but sources have told the Press Association the company is drawing up drastic contingency plans for an administration.
House of Fraser’s collapse would endanger 17,000 staff across its 59 stores.
The group is racing to secure £70 million in fresh funding through a proposed rescue plan.
However, if the money does not materialise, House of Fraser could file a notice to appoint administrators within days, one source said.
House of Fraser is holding crisis talks with HSBC and the Industrial and Commercial Bank of China over the weekend, after the lenders expressed concern about the business’ bid to secure the money from a new investor.
The lenders, advised by EY, are demanding assurances that Hamleys owner C.banner will follow through on a promise of new funding when it takes a majority stake in the business.
C.banner has pledged the cash injection on the condition the retailer pushes through a sweeping store closure programme via a Company Voluntary Agreement (CVA).
However, the store closures require approval from House of Fraser’s landlords, who have not been supportive of the CVA.
House of Fraser has been holding talks with landlords in a desperate bid to secure their approval, fearing they could vote against the CVA.
House of Fraser needs 75% of creditors to back the plan, and has also been seeking the approval of the Pensions Regulator.
It is thought that about 20 House of Fraser stores could close if the CVA goes ahead.
A House of Fraser spokesman said: “Constructive engagement continues between all parties.”