Blue Inc given a lifeline as creditors approve CVA

By

Barbara Santamaria

Published
Mar 24, 2017

Creditors of struggling fashion retailer Blue Inc have approved a plan that will allow the company to reduce its rents and debts and close underperforming stores.

The company proposed a company voluntary agreement (CVA) earlier this month to its landlords and creditors in a bid to reduce its rent debts, which according to reports total £1.8m.

The CVA, undertaken by Begbies Traynor, was approved by 80% of voting creditors including landlords and lenders. The company said the support from key stakeholders was “overwhelming”.

“The approval of the CVA enables the company to continue with its wider organisational restructuring, and secures significant employment within the UK,” said Begbies said in a statement.

“The directors are appreciative of the overwhelming support shown by key stakeholders, including staff, suppliers, landlords and secured lenders, and are committed to continuing to drive the business forward to deliver long-term profitability and growth.”

Kirstie Jane Provan and Gary Paul Shankland of Begbies Traynor are now the joint supervisors of the company and the CVA process.

It remains unclear how many stores will shutter as part of the CVA, but reports point out to more than 30 closures. Blue Inc currently trades from 127 stores across the UK.

The business has also agreed a deal to outsource its warehousing and logistics operations, which could help it save up to £800,000 a year.

Blue Inc has been struggling to increase sales in a highly competitive market and reported a pre-tax loss of more than £1m in the second half of last year.

In January 2016, the company puts its subsidiary A Levy into administration in a move to offload 76 Blue Inc and Officers Club stores, and bought back the healthiest parts of the business, allowing it to continue trading.