It has been reported that creditors of upmarket fashion retailer Flannels have backed its CVA plan.
The deal secures the future for the Manchester-based chain, a favourite with footballers such as Wayne Rooney.
Three under performing stores will close. They are at 55 King Street in Manchester, the Met Quarter in Liverpool and in Birmingham’s Bullring following the CVA.
Creditors voted on the Company Voluntary Arrangement at a meeting in Manchester on Monday. The CVA will see them paid 60p in the pound.
Of the creditors who voted, 93 were in favour of the proposal with one against. Landlords of the 12 continuing stores – including shops in Manchester, Liverpool, Altrincham and the Lowry Outlet Mall – and the head office have agreed to a 20% discount of the principal rent in 2010 and a 10% discount in 2011.
Landlords of the three stores to be closed will receive a payment of 10% of the remaining rent due under the terms of the lease, with a payment of six months’ rent.
Flannels’ MD and owner Neil Prosser said: “The result of the voting demonstrates the fairness of our proposal that was put to creditors.
“We have worked hard to balance the interests of all creditors as part of this process. The proposal allows the business to restructure to a size that mirrors the extraordinary trading conditions that retailers are currently facing. Being able to restructure will preserve the ongoing viability of our business.”
The Insolvency Practitioner stated “This is good news for creditors as the CVA allows the company to remain as a going concern and maintain its trade. It gives the company and its stakeholders greater certainty as it enters the Christmas trading period and greater job security to around165 employees.
“The CVA demonstrates that seeking advice at a sufficiently early stage can allow time for companies to develop and implement a successful restructuring plan.”