Struggling department store chain Debenhams has put itself up for sale in hopes of staving off a liquidation.
In insolvency proceedings for the third time in recent history and the second time within a year, the 242-year-old British chain is operating under existing management using a “light touch” administration process, the equivalent of a bankruptcy in the U.S. Debenhams has already shut down its operations in Ireland, shortly after it entered administration in April. Debenhams announced plans to reopen all 15 stores in Scotland by July 13.
By offering itself for sale, Debenhams might be able to link up with new investors willing to work with the existing owners and avoid shutting down altogether.
The U.K. chain, whose lenders include U.S.-based private equity firm Silver Point Capital and British bank Barclays, was hard hit by the coronavirus pandemic. Earlier this month, rival department store chain John Lewis said it would shutter eight of its 50 stores. And many others, such as Marks & Spencer and Harrods are in the midst of laying off hundreds of staff amid a rapidly shifting economic picture and retail landscape.
“Now that Debenhams has 124 stores in the U.K. open and is trading ahead of expectations, the administrators of Debenhams Retail Ltd. have initiated a process to assess ways for the business to exit its protective administration,” the company said on Sunday. “There are a range of possible outcomes which could include the current owners retaining the business, potential new joint venture arrangements (with existing and potential new investors) or a sale to a third party, and the administrators will be guided by what delivers the best outcome for creditors.”
Debenhams hopes to complete its restructuring by September and has negotiated new lease contracts for many of its Magasin du Nord locations in Denmark, according to the Financial Times.