Debenhams has put a liquidation firm on standby to draw up contingency plans for the department store chain should it not find a solution to its current financial crisis. The company, which is now in administration, has hired Hilco Capital to undertake the task should an answer not be found.
The retailer has underlined that it is currently “trading strongly” and that having the firm on standby does not mean that a liquidation was likely. Last week, Debenhams said it would axe 2,500 more jobs on top of the 4,000 job cuts is announced in May this year.
Debenhams filed for administration in April – the second time in a little over a year – and is examining options to exit the process. These include the current owners continuing to run the business, a sale of Debenhams or a joint venture with new or existing investors.
If the administrators fail to find a buyer or new investment, Debenhams faces liquidation, a process that will put 14,000 jobs at risk.
As reported by the BBC, a spokesperson for the department store said: “Debenhams is trading strongly, with 124 stores reopened and a healthy cash position.”
Debenhams began reopening its shops in June after being closed since lockdown in late March to stop the spread of the coronavirus. The company was struggling before the pandemic, however, and had previously issued a strong of profit warnings. Ahead of last year’s administration, Sports Direct owner, Mike Ashley had proposed injecting £200 million in to the retail chain, an offer that was rejected as Debenhams entered a pre-pack administration which allowed it to keep trading.