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House of Fraser store closure plan approved by creditors

The department store chain will shut 31 of its 59 stores across the UK
House of Fraser
The store closures will lead to the loss of up to 6,000 jobs

House of Fraser’s plan to close more than half of its stores has been approved by creditors despite opposition from landlords.

The department store chain will shut 31 of its 59 stores across the UK and receive large rent cuts on 10 others that will remain open.

READ: House of Fraser swings to loss in 2017 amid tough UK retail market

The store closures will lead to the loss of up to 6,000 jobs.

It will be carried out under company voluntary arrangement (CVA), a form of insolvency being increasingly used by struggling retailers as a way to close stores and ask property owners to lower rents to help avoid financial collapse.

Landlords had hit out at House of Fraser’s rescue plan ahead of the vote on Friday, given that they will shoulder the financial burden. However, creditors backed the CVA since the retailer was likely to enter administration if it failed to go ahead.

"The approval of the CVAs is a seminal moment in House of Fraser’s history," said House of Fraser chairman Frank Slevin.

"We must now continue with the implementation of our restructuring plan. This is also an important milestone in the transaction with C.banner and moves us toward the completion of the capital injection first announced in May."

The approval of the CVA was dependent on an extension to House of Fraser's loans and a cash injection from new owner C.banner.

C.banner, the Chinese owner of Hamleys, has committed to injecting £70mln of fresh capital into House of Fraser once the restructuring has been completed.

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