Debenhams to Hire Team for Restructuring, Telegraph Reports
(Bloomberg) -- U.K. retailer Debenhams Plc, which has issued three profit warnings this year, recruited restructuring experts from KPMG LLP as an insurance provider again raised the cost to cover suppliers’ shipments to the company, British newspapers reported.
The KPMG team has been instructed to draw up an emergency turnaround plan, including the possible filing of a company voluntary arrangement, a form of bankruptcy protection, the Sunday Telegraph reported, without saying where it got the information.
Credit insurer Euler Hermes Group for the second time this year cut coverage for Debenhams’ suppliers, the Sunday Times reported. One provider told the Times his limit had first been cut from 1.5 million pounds ($1.9 million) to 1 million pounds, then to less than 500,000 pounds.
In a letter to suppliers, Euler Hermes cited Debenhams’ third profit warning in June and a downgrade by rating agency Moody’s last month as triggers for the move, the Times said.
As it cut its forecast, Debenhams also said it would rein in spending on turnaround efforts. A drop in revenue has claimed longtime fixtures of the country’s shopping streets such as BHS and prompted House of Fraser and Marks & Spencer Group Plc to shut dozens of stores.
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