The company looks set to be the next national name in retail and leisure to seek a Company Voluntary Arrangement, with up to 100 of its 355 stores facing closure.
Following its announcement in March of a turnaround plan, Carpetright’s creditors and landlords have this week approved the CVA plans put forward, putting around 80 locations at risk of closure.
This year has also seen Prezzo and New Look head down the CVA path, while a CVA is also said to be under consideration by House of Fraser, which has appointed KPMG to advise on a restructuring plan.
Toys R Us UK and Maplin have gone into administration in a torrid year for the sector in the UK.
The CVA has been a preferred route for retailers still confident in their abilities to turn things round providing that liabilities can be cut. The arrangement allows for deals to be struck, allowing the parties to come to agreement on repayment on some or all of a company’s debt and obligations over an agreed period.
One agent told Place North West: “The CVA process has changed the way retailers deal with poorly performing sites, in that there is an option to essentially dump those they don’t want, and reconfigure their portfolios in a comparatively straightforward way.
“The positive side of it is that this brings matters to a head swiftly, meaning landlords have to be proactive in sourcing a new occupier, but there is of course a negative side as well. The element of confidence and profile from letting a unit to a national firm has been eroded, and that is one of the key building blocks of property investment.”