Blue Inc files CVA, seeks rent and debt concessions - report

By

Sandra Halliday

Published
Mar 9, 2017

Young fashion retailer Bue Inc has filed a company voluntary arrangement (CVA) with the rescue plan set to save more than 90 of its 127 stores, according to a report.

As part of the CVA, the struggling retailer has asked its landlords to cut its rent bill and its lenders to reduce its debt. The company has identified £1.8m in rent arrears that it cannot currently pay, the Telegraph reported.

The newspaper said the filing includes a schedule for the company to pay the arrears over the next 42 months, as well as paying back its lender, Barclays.

And it said co-CEOs Hezi Yechiel and Miraj Khan have not been able to find an extra £3m in capital to service the firm’s debt and buy more stock. Yechiel and Khan are among the firm’s biggest investors. They had been suppliers to the firm and bailed it out with a major loan.

Fashion Network contacted the company for a comment but has not heard back as we published this report.

The admission of its troubled financial state is a complete turnaround from nearly three years ago when the company was planning a London stock market float that would have valued it at around £600m.

But it pulled that float due to market volatility in favour of a private fundraising and business since then has deteriorated leading it to close a raft of stores while also placing a subsidiary into administration before buying back the profitable parts of the business.

As part of the CVA plan, the company is reported to have identified £800,000 of annual savings via an outsourcing deal for warehousing and logistics and will meet with creditors in two weeks’ time to see whether its plan is acceptable to them.

MD Peter Girt said the CVA, which should see creditors gaining 36p for every £1 owed rather than nothing if Blue Inc were to go into administration. He said this would allow the company to continue operating and “protect the interests of our employees, creditors and suppliers.”

Girt, a Blue Inc veteran, took the role last autumn after having been retail operations director. He took over from long-serving chief Steven Cohen,

The company made a pre-tax loss of more than £1m in the second half of last year, despite recording sales of £33.1m.