The closure of Altrincham department store Rackhams has been confirmed today after creditors backed House of Fraser’s rescue plan to close more than half its stores.
Creditors including landlords and suppliers met at 10am this morning to vote on a company voluntary arrangement (CVA) – a form of insolvency proceedings – that it would use to overhaul its business.
There had been some disagreement from landlords – who will have to shoulder most of the financial losses – but they were outvoted.
The news means that House of Fraser will go ahead and close 31 of its 59 shops – including Rackhams in the Stamford Quarter – and bring in huge rent cuts on 10 others.
There was a likelihood the retailer would have collapsed completely had the plan not been approved.
A total of 6,000 jobs – including 2,000 House of Fraser staff and 4,000 brand and concession partners – will now be lost.
The move has been described as the most significant in the company’s 169-year history.
House of Fraser said it will now have a “more sustainable cost base and a platform for future growth to deliver an improved customer proposition”, and the CVA will help it to access new capital from international retailer C.banner.
Frank Slevin, Chairman of House of Fraser, said: “The approval of the CVAs is a seminal moment in House of Fraser’s history. We must now continue with the implementation of our restructuring plan. This is also an important milestone in the transaction with C.banner and moves us toward the completion of the capital injection first announced in May.”
Alex Williamson, CEO of House of Fraser, added: “The CVA proposals have been approved by our creditors and we are grateful for their ongoing support and belief in the future of House of Fraser.
“This was clearly a difficult decision to take but is, ultimately, the only one to secure our future. Our focus is on supporting all of our affected colleagues and we are exploring every opportunity available to them working alongside the Retail Trust and the wider retail community.”
Rackhams is likely to continue trading until early 2019.