Struggling department store chain Beales has been given a reprieve by its creditors.
More than 90 per cent of its landlords voted at a creditors’ meeting in London to accept proposals to cut rents on 11 of its 29 stores nationwide.
This vote gives Beales a unique opportunity to restore the group to financial health.Stuart Lyons, chairman
The retailer had been seeking agreement for a Company Voluntary Arrangement, which sought to cut rents where it was claimed lease agreements were too onerous.
Beales, founded in 1881, has 29 department stores across the country.
The proposals affect just a small number of stores which have been unprofitable due to high legacy rents.
They include the King’s Lynn store for which a reduced rent, equivalent of 30 per cent, will be paid for 10 months while the company talks to landlords to agree the basis of any continued trading.
Stores in Peterborough, Wisbech, Spalding, Skegness, Diss and St Neots are not affected.
Beales’ chairman Stuart Lyons said: “This vote gives Beales a unique opportunity to restore the group to financial health.
“We are extremely grateful to our business partners for their overwhelming support.
“These legacy rents have been dragging the group down.
“These leases were agreed some years ago and are no longer sustainable due retail due to changes in the economy and local conditions.
“Our landlords now have the opportunity to restructure them on equitable terms.”
Rob Croxen, restructuring partner at KPMG and ‘supervisor’ of the CVA, said: “Today’s creditor vote in favour of the CVA proposal will allow Beales to take its first critical step towards turning the business around, tackling head on the issue of onerous legacy leases which have hampered the organisation in recent years.
“A company can only propose a CVA when the alternative is administration and it must always offer a better return to creditors.
“In this way, both the creditors and the company are able to fix an underlying business issue without going through a full trading administration; a positive outcome for Beales’ creditors and good news for customers and employees.
“As with all CVAs, more than 75% of creditors had to vote in favour in order to pass the resolution. Today’s vote saw us secure significantly more than this majority with 93% of all creditors voting in favour of the CVA.”