Debenhams could soon be liquidating.
The beleaguered chain has hired restructuring advisers from Hilco Capital to draw up contingency plans in case it is unable to sell its business as it undergoes bankruptcy proceedings. The move threatens the future of its brick-and-mortar fleet as well as puts thousands of jobs at risk.
In a statement obtained by FN, Debenhams said that the company is “trading strongly” with a “healthy cash position.” (It currently has a roster of 124 outposts.)
“The administrators have appointed advisors to help them assess the full range of possible outcomes, which 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,” it wrote.
The announcement comes just days after Debenhams said it would trim 2,500 roles — or about 17% of its 14,500 staff in the United Kingdom — in its department stores and warehouses. The company continues to struggle from the impact of the coronavirus pandemic, which led it to file for administration for the second time in the calendar year back in April.
“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,” it wrote in a statement early this week. “Such difficult decisions are being taken by many retailers right now, and we will continue to take all necessary steps to give Debenhams every chance of a viable future.”
The 242-year-old retailer appointed administrators four months ago “in order to protect the business” get it “into a position to reopen and trade as many stores as possible again when restrictions are lifted.”
Since the government lifted restrictions on nonessential businesses, Debenhams has reopened all of its physical units. In May, it announced that about 20 of its locations will remain permanently shuttered after it failed to reach a rent agreement with mall operator Hammerson — a move that has already impacted more than 1,000 jobs.
Debenhams put itself up for sale last month in an effort to stave off a liquidation and hopes to secure a buyer by the end of September. Financial advisory and asset management firm Lazard has been appointed to oversee the process.
The department store is not alone in facing financial headwinds as COVID-19 sweeps the country. Fellow British retailer Laura Ashley blamed the virus when it declared insolvency in March, while fashion group Oasis Warehouse went bankrupt in mid-April. According to a late March report from market research firm Global Data, one-fifth of U.K.’s apparel and footwear spend could be wiped out this year due to the outbreak.