Another iconic department store is closing down. Announced earlier today, the UK’s Debenhams (OTC:DBHSF) has collapsed into administration, leaving the retailer’s lenders to take control of the company.
Debenhams in Administration
The brand rejected a last-minute offer by Sports Direct owner Mike Ashley to “underwrite an increased £200 million rights issue.”
According to reports, Ashley upped his previous offer of £150 million to £200 million last night at midnight. It was a last effort bid to woe management.
However, Debenhams said in a statement earlier that it was “not sufficient” for the lenders.
Further, Ashley’s offer was conditional on him becoming CEO.
Trade as Normal
Debenhams’ lenders include High Street banks and US hedge funds such as Barclays and Bank of Ireland, as well as Silver Point and GoldenTree.
According to administrators, the lenders are looking to sell the business as soon as possible with FTI Consulting appointed to carry out the process.
For now, the firm has insisted that stores will continue to operate as normal.
However, in the not too distant future, the move is expected to close around 50 Debenhams outlets as part of a greater restructuring program.
Unfortunately for Ashley, not only was his rescue bid rejected, his company Sports Direct holds a 30% investment stake, which will now be wiped out.
Potential in the Future
Retailers have been suffering amidst the changing retail landscape. But there is a potential for resurgence.
Last week, major retailer Sears (OTC:SHLDQ) rose from the dead. The American behemoth filed for bankruptcy last year but began opening a smaller homewares chain of stores last week.
Its move signals a potential turnaround for retailers suffering from an e-commerce driven era. Though it’s early days, this new venture, dubbed Sears Home & Life, could take off and show the potential for change when bankruptcy is handled correctly.
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