House of Fraser set to fall into administration

Heather Diaz
August 11, 2018

Mike Ashley has said his ambition for House of Fraser is to transform the beleaguer department store into the "Harrods of the high street" pledging to "keep as many stores open as possible".

The department store chain, with a branch in Worcester's Crowngate, said discussions between interested investors and its main creditors did not conclude in a "solvent solution" and it has no choice but to appoint administrators.

A spokesperson for House of Fraser said this was "only a temporary situation and will be resolved".

Sports Direct now owns all House of Fraser assets including its brand, stores and stock.

Administration is the process whereby a troubled company calls upon independent manager in a bid to restructure the business and remain operational.

If there is a more hopeless business to be in than department stores, it is hard to think of it.

"An acquisition of the 169-year-old retail business will see House of Fraser regain stability, certainty and financial strength".

It is understood that Mr Day's proposal was in excess of £100m, would have avoided an administration and included House of Fraser's pension scheme.

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Liz McAreavey, chief executive of the Edinburgh Chamber of Commerce, said: "Hopefully this sale will not only protect this iconic high street brand, but will also safeguard thousands of jobs".

Now, the government has indicated that it could bow to mounting pressure to reform the punitive business rates system after the tax was named among factors which contributed to House of Fraser's downfall.

House of Fraser revealed last week that it had lost a proposed investment from the Chinese owner of Hamleys and was looking for a new rescuer.

The company's chairman Frank Slevin added: "This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround plan". Joint administrator Alan Hudson said the sale "preserves as numerous jobs of House of Fraser's employees as possible".

Mr Ashley was one of at least four parties squaring off to rescue House of Fraser after China's C.banner International Holdings Ltd shelved plans to buy a majority stake.

Bosses had hoped to close 31 of its 59 stores under a company voluntary agreement, a controversial insolvency process which allows struggling businesses to close unprofitable sites and cut rents.

It is not clear what will happen now to those stores and their workforce following the takeover by Mr Ashley.

For the year ended 28 January 2017, the House of Fraser group had gross assets of £946.3m and made £14.7m net profit.

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