House of Fraser faces legal challenge against store closures

Landlords are challenging House of Fraser’s bid to shut more than half its stores.

House of Fraser’s boss has described the store closure plan as its last viable option (Peter Byrne/PA)
House of Fraser’s boss has described the store closure plan as its last viable option (Peter Byrne/PA)

The future of House of Fraser has been thrown into doubt after landlords launched a legal challenge against the retailer’s store closure programme.

House of Fraser has been trying to push through the closure of 31 of its 59 stores through a Company Voluntary Arrangement (CVA), but landlords are challenging the plan in the courts, saying they have been treated unfairly.

The restructuring plan could fall through if the landlords are successful, raising the prospect that House of Fraser may fall into administration.

Alex Williamson, chief executive of House of Fraser, has previously described the CVA as the “last viable” option for the business.

In a statement, advisers to House of Fraser’s landlords said: “As a group, landlords experienced a complete lack of meaningful engagement and transparency from the outset of the House of Fraser CVA process, despite repeated requests for details on how the company is expected to trade over the next seven months under the CVA.

“To date, no information has been provided to our landlord group, with no guarantees that the business will continue, leaving landlords unable to reasonably assess the likelihood of success or otherwise of the company’s future rescue plan.”

House of Fraser’s creditors voted on the CVA last month.

The retailer required the backing of more than 75% of creditors for the plan to go through.

The landlords have challenged two aspects of House of Fraser’s CVA, arguing that they have been unfairly prejudiced through the process, and that their voting power was arbitrarily discounted.

Landlords have filed their challenge in the Scottish courts, and it is thought the case will start in the next three to six weeks.

JLL and Begbies Traynor have been acting as advisers to the landlord group.

A House of Fraser spokesman said: “We note the statement made by Begbies Traynor and JLL on behalf of a group of landlords but at this stage we have not received anything formally.

“On the assumption that a challenge is filed in court, whilst we are disappointed, we look forward to robustly defending our position and we are confident that this will not affect our commercial plans.”

Press Association

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