Yahoo Finance Blue Inc creditors approve store rescue plan
Creditors for struggling retailer Blue Inc have approved a plan to stage payments for rent arrears and write off some of the company’s debt in a bid to keep the stores trading.
The firm said on Thursday that its creditors had agreed a company voluntary arrangement. According to the CVA documents, the company will look to close around 33 of its 127 stores, and pay back landlords to whom it owes rent over the next three and a half years.
An estimated state of affairs for the company, prepared as part of the CVA process, shows there is a £27.2m black hole in the business.
Blue Inc has already agreed a deal to outsource its warehousing and logistics operations, which it says has saved it £800,000 a year.
The firm’s two biggest creditors – Barclays Bank, to whom it owes £5m, and a supplier, Padma Textiles, to whom it owes £4.8m – have not yet revealed the nature of their agreement with the retailer.
Kirstie Jane Provan and Gary Paul Shankland of Begbies Traynor are now the joint supervisors of the company and the CVA process.
Blue Inc said: “The directors are appreciative of the overwhelming support shown by key stakeholders, including staff, suppliers, landlords and secured lenders, and are committed to continuing to drive the business forward to deliver long-term profitability and growth.”
The CVA is something of a lifeline to Blue Inc, which last year placed its subsidiary, A Levy, in administration in order to offload 76 stores, cutting 500 jobs. It then bought back the more profitable parts of the business, enabling it to continue trading.
However, it has continued to struggle because of the cost of buying stock and lower than expected sales. Chief executive Steven Cohan stepped down from the role, which he had held for 11 years, in September.
Just three years ago the company, which at the time was chaired by former Marks & Spencer boss Lord Rose, was due to list on the London stock market with a valuation in the region of £600m. The float was pulled in June 2014 in favour of a private fundraising.
