- Blue Inc seeks deal to close stores
- CVA filed
- Extra capital needed
Fashion retailer Blue Inc is seeking to cut its rent and debts as part of a rescue deal.
Blue Inc has filed a company voluntary arrangement that will allow it to shut stores and defer payments as it seeks a turnaround.
It needs £3m of extra capital to pay for more stock and to service its debts, but co-chief executives Hezi Yechiel and Miraj Khan have not been able to find the money.
A company voluntary arrangement (CVA) filed by the retailer indicates that it wants to shut 33 of its 127 shops.
The retailer has identified a package of stores where it is in rent arrears by £1.8m, according to The Telegraph.
It will repay that money over the next three and a half years as part of a schedule of payments amounting to £7m, which also includes repayments to creditors such as lender Barclays.
Blue Inc has already arranged to outsource warehousing and logistics, which it says has saved it £800,000 a year.
Creditors will be asked to vote on the CVA on March 22. Under its terms they would get back 36p in the pound.
Blue Inc managing director Peter Girt wrote in the documents: “In a challenging market it is vital that we ensure our operation runs as effectively and efficiently as possible as we drive the brand to continue to deliver great product, great service and great price.
“We believe this restructure will allow us to achieve this and protect the interests of our employees, creditors and suppliers.”
Last year the retailer put its A Levy subsidiary into administration to shed 76 stores, cutting 500 jobs. It then bought back the more profitable parts of the business, enabling it to continue trading.
However, stock costs and lower than expected sales since have hit performance.
Blue Inc made a pre-tax loss of just over £1m in the six months to December 31 on sales of £33.1m.