House of Fraser has fallen into administration, placing around 17,000 jobs at risk in what could potentially become the biggest high street casualty since the fall of BHS. Earlier this morning, House of Fraser said that “discussions with interested investors and its main secured creditors have not concluded in a solvent solution” forcing the retailer to call in administrators.
The move comes after talks with potential investors including Sports Direct’s Mike Ashley and Edinburgh Woollen Mill Group’s Philip Day, failed to lead to a successful rescue deal.
While the 17,000 employees across the company (11,500 of which are concession staff) now face uncertainty, the department store could still have some parts of it salvaged in the form of a pre-pack administration. A pre-pack administration is a form of insolvency that allows a new buyer to ‘cherry pick’ the best assets of a business and also leave behind liabilities, such as pension schemes.
In an announcement to the Luxembourg Stock Exchange, House of Fraser said “significant progress has been made” in reaching a sale of its business and assets. The retailer also stressed that its offices and all of its stores will continue to trade as per normal as it looks to reach a deal. Chief executive Alex Williamson said: “We are hopeful that the current negotiations will shortly be concluded. An acquisition of the 169-year-old retail business will see House of Fraser regain stability, certainty and financial strength.”
Just ;ast weekend, House of Fraser settled a legal dispute with landlords who sought to challenge its CVA, which, alongside the 31 of its 59 stores earmarked for closure, also featured rents reductions on 10 stores that will remain open, a relocation of offices and 6000 job cuts. It was thought that the result of the legal challenge would have paved way for the department store to secure the new funding it urgently needs.
Auditing firm Ernst & Young (EY) is poised to be selected as House of Fraser’s administrators.
