1,800 jobs saved from redundancy as Select wins CVA approval
today Jun 12, 2019
Select’s proposal for a company voluntary agreement (CVA) was approved by 87% of its creditors at a meeting in Central London on Monday.
This is the second time the troubled high street fashion retailer has resorted to this form of insolvency procedure to avoid taking more drastic measures in its bid to survive.
Joint administrators, Andrew Andronikou, Brian Burke and Carl Jackson of business advisory firm Quantuma said the approval secures the current employment of Select’s 1,800 staff and preserves the operation of its 169 stores, centralised head office and warehouse facilities.
Select has been hit by a complex combination of business rate increases, currency devaluation, weaker consumer demand and Brexit uncertainty.
Andrew Andronikou, joint administrator, said: “The approval of the joint administrator’s proposals gives the best outcome for creditors as a whole. This will mean no immediate closures of the company’s stores, and no immediate redundancies.
“This should provide a platform upon which the company can deliver changes to its operational costs and structures, allowing it to stabilise and move forward. As widely reported, there are many challenges in the UK retail sector, a factor which has adversely affected the high street. We are therefore pleased with the outcome of today’s meeting and the support displayed by creditors in their acceptance of the proposal, which has resulted in the rescue of the business.”
Whilst the retailer’s latest CVA proposal had a majority significantly above the required threshold of 75%, it seems Select is starting to lose the support of some of its creditors, given that its 2018 CVA plan was backed by 94% of creditors.
When the company fell into administration last year, the restructuring process allowed it to cut its rents by up to 75%.
Some retail landlords and property firms have criticised the growing use of CVAs for being unfair, claiming retail businesses are now abusing the procedure. High profile companies including New Look, Mothercare, House of Fraser and Arcadia have all gone down the CVA path in the last year.
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