CVA approval for Flannels

Upmarket fashion retailer Flannels, which has stores in the Bullring and Burlington Arcade, Birmingham, has had its proposal for a company voluntary arrangement (CVA) approved by creditors and members of the company.

As part of the CVA, a dividend of 60 pence in the pound will be paid to unsecured creditors, with certain trade creditors receiving an additional ten pence in the pound in relation to likely retention of title claims and for ongoing supply.

Of the creditors who voted, 93 were in favour of the proposal with one against, demonstrating substantial support for the company’s proposal, which achieved the support of 89 per cent of creditors by value of claims admitted for voting.

Flannels Group Limited is a retailer of luxury fashion clothing and trades across the country.  It has stores predominantly based in the Midlands and north of England.  As a result of the general economic climate and reduced levels of consumer spending, the business has faced significant challenges over the past year that have in turn impacted on its trading performance.

Three Flannels stores, including the Bullring and one in Manchester and Liverpool, are set to close as part of the CVA. Landlords of the three stores will receive a payment of ten per cent of the remaining rent due under the terms of the lease, with a de-minimus payment of six months’ rent.

Landlords of the 12 continuing stores and the head office have agreed to a 20 per cent discount of the principal rent in 2010 and a ten per cent discount in 2011.

Neil Prosser, Flannels managing director and owner, said: “The result of the voting demonstrates the fairness of the proposal we 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 retailers are currently facing.  Being able to restructure will preserve the ongoing viability of our business.”

Bill Dawson and Daniel Butters, partners at Deloitte, were appointed as Joint Supervisors of the CVA in November. Their role will now be to supervise the Company’s adherence to the terms of the CVA proposal.

Mr Dawson said: “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 around 165 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.”

 ENDS

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