British multinational retailer, Debenhams preparing to file for bankruptcy as the Coronavirus lockdown continues.
With 22000 staff, the retailer is considering filing a formal notice of intention to appoint administrators next week. The legal process protects from creditors for 10 working days while a company tries to secure a rescue deal.
“Like all retailers, we are making contingency plans reflecting the extraordinary current circumstances. Our owners and lenders remain highly supportive and whatever actions we may take will be to protect the business during the current situation,” said a spokesman from Debenhams.
“While our stores remain closed in line with government guidance, and the majority of our store-facing colleagues have been laying off, our website continues to trade and we are accepting customer orders, gift cards and returns,” Debenhams added.
This step of potential bankruptcy measures would be intended to shield the business so it could continue to trade.
Debenhams has already closed 22 stores – 19 of which shut in January – resulting in more than 700 job losses. More than 28 of its remaining 141 stores had been lined up for permanent closing next year.
During the coronavirus lockdown, the retailer has written to landlords – Debenhams has more than £600m of debt– asking for a five-month rent holiday and reportedly asked suppliers for a 31-day delay to some payments as it seeks to conserve cash.
In this unprecedented calamity, Debenhams is one of many retailers in financial hitches because of the COVID-19 shutdown.
This scenario can be called the ‘tip of the iceberg’ as even before the outbreak the UK retailers were struggling as more and more consumers were shifting to online platforms for shopping and spending on something other than on fashion.