Select Fashions are a high street female fashion retailer with 189 stores and 2,000 staff members. The brand targeted the 18-35 age demographic.

The challenge

After several years of consecutive losses, including losing £1.5 million on sales of £81 million for the year to June 2016, One80 experts were approached by the management team, seeking assistance in rescuing the failing business and initially proposed a Company Voluntary Arrangement (CVA).

The solution

Due to the ongoing volatility of the retail market, we considered a CVA structured over a period of years would not be a viable solution. A short-term solution in order to deliver a longer-term business plan was required. As a result, we put in place a nimble and flexible CVA, based upon realigning fixed costs, including rent and rates, to the trading profile of the business. We negotiated a major reduction in the debt levels with a very wide range of financial stakeholders, whilst also securing commitments to sufficient ongoing financial support and maintained critical supply relationships. The securing of this commitment allowed us the funding and time required to implement a substantial corporate restructuring plan, which would secure the long-term future of this fashion retailer.

Our proposal allowed us to vary the terms of store property leases and delivered a reduction of the existing rent roll as well as an initial respite period. Stores were split into four categories based upon operational efficiency and sales. The chain’s top 50 stores remained unaffected by the process, although, as with all stores, monthly payment terms were applied in order to assist cash flow needs. 25 landlords would receive 25 per cent rent, reducing to nil rent in 3 months; 81 would receive 70 per cent, with 50 per cent paid to a further 27 landlords.

The structure of the deal enabled creditors to recognise that this was entirely necessary to rescue the business and to obtain their support in order for the business to deliver on its plan. Through negotiation, we were able to secure a 94% approval rating of the proposal at the meeting of creditors. Acceptances were received from all classes of creditors and support obtained from relevant trade bodies.