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House of Fraser: Rescued Retailer - 9th October 2018 - Click for larger version House of Fraser: Rescued Retailer - 9th October 2018

Nowadays it seems as though a month seldom goes by without yet another high street retailer going into administration. Poundworld, Maplin and Toys ‘R’ Us are amongst the latest casualties in the sector.

However, the household name which has undoubtedly grabbed most of the recent headlines in relation to insolvency proceedings is House of Fraser.

House of Fraser was founded in 1849 in Glasgow and has expanded over the decades by means of various acquisitions. Originally a family business, its ownership has passed through several different hands in recent years prior to its well-documented takeover by high profile British businessman, Mike Ashley.

In August 2018, Mr Ashley acquired House of Fraser for £90 million after it fell into administration. The retailer had been struggling for some time, and a proposed company voluntary arrangement with the Chinese owners of Hamleys, C.banner International, had also failed.

While Mr Ashley has made public his intention to keep at least 80% of House of Fraser stores open, this is proving to be no mean feat. Achieving this ambitious target largely depends upon the willingness of landlords to renegotiate the terms of commercial leases so that rents are vastly reduced - in some cases, to zero. It is perhaps unsurprising that some of these negotiations have been unsuccessful and a number of additional stores have consequently been earmarked for closure.

Further store closures means, of course, more job losses. Although thousands of positions have been retained as a result of the recent takeover, it is understood that staff at those branches whose future remains uncertain are currently being engaged in redundancy consultations. There are also likely to be ramifications for those employed by House of Fraser’s creditors.

Another emerging issue that has been attracting negative press relates to consumer rights. People have been unable to use gift cards and have been struggling to obtain refunds for goods that were bought prior to House of Fraser entering into administration. Unfortunately for customers, however, the retailer’s new owners have no legal liability for gift cards and goods purchased before the company was rescued out of administration.

How we can help:

If your business is experiencing difficulties, the team at Macdonald Henderson can provide practical and down to earth legal advice. With expertise in fields including commercial property, corporate recovery, employment law and corporate and commercial law, we have the capability and know-how to guide you through the legal process.

Key Contacts:

Corporate recovery – Alan McKee (alan@macdonaldhenderson.co.uk)
Commercial property – Ian Anderson (ia@macdonaldhenderson.co.uk)
Employment law – Laura Forrest (Laura@macdonaldhenderson.co.uk)

Last updated: 9.22am, Tuesday 9th October 2018

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Nowadays it seems as though a month seldom goes by without yet another high street retailer going into administration. Poundworld, Maplin and Toys ‘R’ Us are amongst the latest casualties in the sector.
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