Background

Debenhams was an iconic UK retail brand with an international footprint, extensive high street and shopping centre presence and significant online sales turnover. The company could trace its UK retail roots back almost 250 years, but more recently it had faced tough trading conditions, and had successfully survived an insolvency and pre-pack sale in 2019. However, within days of Debenhams closing all its 142 stores across the UK as part of the COVID-19 lockdown restrictions introduced in March 2020, the company entered administration again, and appointed FRP as administrators.

Action

FRP’s Restructuring Advisory team led the administration process, with all work initially undertaken remotely to comply with COVID restrictions. The Administrators delegated some management powers back to the directors to run the day-to-day business under their supervision, while the team dealt with a wide range of workstreams including suppliers (more than 250 merchandise suppliers as well as utilities and other services), Retention of Title claims relating to £55 million worth of stock, and technical challenges in maintaining the website and automated logistics processes. COVID restrictions were lifted after three months, but it was clear some stores would remain closed. Trading the bricks and mortar retail business with diverging COVID rules around the UK created real challenges, and it became evident that rescuing the company or selling the business as a going concern wasn’t going to be possible.

Outcome

With no buyer for the UK bricks and mortar business, FRP secured a £55 million cash deal with online retailer boohoo group plc to acquire the global rights to Debenhams brands and its websites, achieving the best outcome for the business’ stakeholders. Debenhams stores remained open until the stock liquidation was completed, before all stores were permanently closed. In addition, the Administrators’ subsequently completed the sale of the shares of Magasin du Nord, Debenhams’ Danish subsidiary business, for an undisclosed sum.