Debenhams draws up contingency plans for potential liquidation

Debenhams has reportedly drawn up contingency plans in the event of a potential liquidation, as it continues to weather the Covid-19 pandemic.

According to a report by Sky News, it is understood that Debenahmans has drafted in Hilco Capital to support the retailer if the sales process for the 242-year-old business does not go through.

In July, Debenhams confirmed that administrators were considering the sale of the chain to a third party, in a bid to lead the business out of its current administration.

According to The Guardian, it appointed investment bank Lazard to oversee the sale process, and “hopes to secure a buyer before the end of September”.

In a statement, the retailer said at the time: “Now that Debenhams has 124 stores in the UK open and is trading ahead of expectations, the administrators of Debenhams Retail Ltd have initiated a process to assess ways for the business to exit its protective administration.

“There are a range of possible outcomes which could include the current owners retaining the business, potential new joint venture arrangements (with existing and potential new investors) or a sale to a third party, and the administrators will be guided by what delivers the best outcome for creditors.”

Debenhams collapsed into administration in April, and appointed Geoff Rowley and Alastair Massey of FRP Advisory to handle the process.

Last week the retailer cut 2,500 staff roles, which were made in order to give the company “every chance of a viable future”.

A spokesperson said staff affected by redundancy have been informed. They added that “such difficult decisions” are being taken by many retailers right now, and the retailer will continue to take “all necessary steps” to continue trading.

The spokesperson added: “We have successfully reopened 124 stores, post-lockdown, and these are currently trading ahead of management expectations.

“At the same time, the trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations.”