High street shops Monsoon and Accessorize will receive rent cuts after landlords voted for a plan to reduce its costs.
Creditors backed plans to reduce rents on 135 stores at a meeting on Wednesday, after Monsoon proposed a Company Voluntary Arrangement (CVA). A CVA is a form of restructuring that companies use in Britain to avoid going bust, but there has been controversy, with landlords claiming retailers are misusing them to cut their costs.
A significant majority of landlords approved the rent reduction proposals for both high street retailers. Paul Allen, chief executive of Monsoon Accessorize, said: "We are pleased with today's result and would like to thank our suppliers and landlords for their continued support.
“This action will help us to reshape our businesses for the future, and we will now turn our attention to the wider turnaround plan and delivering a sustainable and profitable business moving forward.”
Monsoon has 258 stores in Britain and Ireland, but said last month that its current rent bills are “unaffordable” due to the crisis on the British high street. It comes after Monsoon revealed that its credit insurance has been removed, meaning it must pay suppliers upfront.
The company's founder Peter Simon had agreed as part of the plans to provide an emergency £12 million (€13.40m) loan – which will be repaid first if the company goes bust – and a further unsecured credit facility of £18 million at zero interest.
The company’s Irish operations are controlled by the UK parent company. The Irish arm – Monsoon Accessorize Ireland Ltd – recorded a profit before tax of €305,368 in the year to August 26th, 2017, down from €1.05 million the previous year. Its turnover also dipped to €12.9 million. – PA
