House of Fraser faces a lawsuit from a group of landowners on a plan to close more than half of its stores next spring.
Landlords who have filed a claim through the court of session in Edinburgh on Friday, saying they “unfairly treated” in the process of insolvency, a process known as a company voluntary agreement (CVA) that was approved by a majority of creditors, including landlords, last month.
Group who advised the accountancy firm Begbies Traynor and property Advisory firm jll also claim that there were “material irregularities in the implementation of house of Fraser CVA”.
Plan CVA involves the closure of 31 of the 59 house of Fraser Department stores, including the flagship in Oxford street in London. The closure will result in about 6,000 job losses from the 17,000 employees, and the company warned, the only alternative is to go to management.
The owners and employees have a right to be mad at house of Fraser | Nils pratley project
A statement from the landlord group said it was “unfair” that the house of Fraser’s majority shareholder, Nanjing Cenbest, which is part of China’s Sanpower conglomerate, was set to get £70 million for part of its stake in the troubled Department store with a new investor, S. banner, as part of a wider rescue deal, while the owners of lenders to take a financial hit.
“We believe that our lawyer that the landowners were disproportionately affected during the CVA process; not only in comparison with other creditors, but also how they could be treated if alternative routes to save the company was fully investigated,” the statement says.
They complained that they were not properly consulted about CVA or given sufficient information on how house of Fraser had planned to trade in the coming months.
The lawsuit is seen as retaliation by landlords in relation to the increasing use of vegetables which have become commonplace in recent months, with labour in retail trade and restaurant business, using them to offload unwanted processes or reduce the rent.
“Brew has been developed as a means to save the business, not just a tool to shed unwanted leases for the benefit of shareholders,” said mark fry from Begbies Traynor and Charlotte Coates at jll. “It is our collective opinion that the CVA process retail in the UK was fundamentally flawed and in need of correction.”
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The CCC is a mandatory condition investment transaction that Mr banner agreed with Nanjing Cenbest, headed by one of the richest men in China, the yuan yafey.
C. banner has agreed to pay Nanjing Cenbest £70 million in a deal that will give him 51 percent of the shares in house of Fraser. It also pledged to invest another £70 million in a plan to revive the Department store.
House press Secretary Fraser said: “We have taken note of the statement made by Begbies Traynor and jll on behalf of the group of homeowners, but at this stage we have not received anything officially. On the assumption that the call is submitted to the court, while we are disappointed, we look forward to vigorously defending our position, and we are confident that this will not affect our commercial plans.”