Select administrators call for second CVA deal

Following its collapse into administration, the administrators of fashion retailer Select have asked landlords to approve a company voluntary arrangement to keep the business from ceasing to trade. The plan put forward by joint administrators from Quantuma does not explicitly rule out job losses or store closures.

The UK high street is enduring its most challenging period in five years. Averaging 14 closures per day in 2018, the UK saw a net closure of 1,123 stores in the first half of 2018 alone, with worse expected for the year as a whole. The poor trading environment has bled into this year, with a number of high street names collapsing throughout 2019.

Earlier in the year, this saw HMV among the high profile casualties of the on-going consumer crunch. A number of factors including Brexit and the weakened pound are at play, however key to all of this is the continuing stagnation of wages in Britain. Even with employment at a decades-long high, without an improvement in pay many customers have scaled back on spending they see as a luxury, while inflation on the cost of living spirals upward.

The latest business to succumb to this hostile environment is fashion chain Select. After a sustained period of poor sales, prevailing high street conditions meant a proposed turnaround plan the chain had tried had not succeeded, and the company appointed administrators from consulting firm Quantuma. The move jeopardised the future of its 1,800 employees and its 169 UK stores.

Andrew Andronikou, one of the joint administrators from Quantuma, said, "We will continue to trade Select whilst we assess all options available to the business, with the aim of achieving the optimum outcome for all stakeholders… Options include a sale of the business, in addition to entering into discussions with those parties who have already expressed interest in acquiring the business.

Now, news has broken that the administrators have begun another attempt to save Select and its 1,800 employees in the form of a second company voluntary arrangement (CVA) to try to cut costs. A CVA is an insolvency procedure which typically includes cutting property costs by seeking store closures or a reduced rental bill.

Quantuma said no immediate store closures or job cuts were planned, but would not rule them out, while landlords will need to approve the plan. If landlords voted against the measures – as they did when House of Fraser employed similar tactics last year – and no buyer was found, the company could cease trading.

According to Andronikou, "The proposal does not outline the immediate closure of any of the company's stores, and any immediate redundancies, however some may occur even if the proposal is approved.”