Paperchase has won creditor approval for its CVA, which will see it close five shops and tie future rents at stores to turnover.
Following the resolution, Retail Week understands that five shops will definitely shutter, although further store closures are possible.
The CVA will also allow rents at 28 of its 145 stores to be slashed by 50% for a three-month window, after which those stores would either shut or continue to operate for a rent-free period.
Paperchase will look to relocate as many staff as possible from the five stores impacted; however, job losses have not been ruled out.
Aligning rents to footfall
Paperchase boss Duncan Gibson said the CVA would allow the stationery retailer to better align rents with footfall and trading numbers.
He said: “I am pleased to have had our proposal approved and I would like to thank our creditors for the support they have shown us.
“The alignment of store rents to footfall and trading, alongside our long-term strategy to diversify and increase revenue from UK and international partnerships, and online sales, will lay the foundations for a successful future.”
KPMG restructuring partner Will Wright, who is the joint supervisor of the CVA, said: “The engagement and buy-in of all stakeholders throughout this process has been vitally important in putting together an innovative CVA proposal which, following today’s approval, will allow Paperchase to move forward with financial and operational restructuring plans.
“Today’s vote saw a majority of all voting creditors choosing to approve the CVA, surpassing the 75% total required in order to pass the resolution.”
In the 53 weeks to February 3, 2018, Paperchase’s EBITDA slumped 50% to £4.5m despite an uptick in total sales to £141.2m.
At the time, Paperchase chair Nick Wood blamed “declining footfall” to stores as the main reason for the profit hit.