Debenhams officially filed for administration on Thursday in a widely flagged move intended to protect it from the worst effects of the coronavirus crisis. It's the second time in a year that the department store chain has gone into administration. Its previous filing and the funding it subsequently received had been hailed as a new start for the chain and one that could potentially set it up for a strong future.
But that was before the coronavirus hit and the subsequent social distancing and lockdown that devastated sales to physical shops.
The company has named Geoff Rowley and Alastair Massey of FRP Advisory as its administrators.
Earlier this week the retailer had described its plan as a "light touch" administration with the main aim being to protect it from its creditors at a time when it's generating minimal cash flow because all of its shops are shut. Had its creditors brought legal action to recover what they're owed, this could potentially have forced it into liquidation.
The light touch approach means the company will retain its existing management team, although they will be under the control of the administrators. The aim is to get it into a position to open as many of its stores as possible once the lockdown is over.
But that aim also suggests that some shops might not reopen and that it could take the opportunity to close more stores than it had originally planned to.
The company's stores in the Republic of Ireland are among them. The 11 shops are currently shut and will not reopen. CEO Stefaan Vansteenkiste said: “We are desperately sorry not to be able to keep the Irish business operating but are faced with no alternative option in the current environment. This decision has not been taken lightly and is no way a reflection on our Irish colleagues, whose professionalism and commitment to serving our customers has never been in question.”
Debenhams continues to trade online for now, although it's unclear just how much it's selling at present and whether publicity around the administration filing will make some consumers nervous about buying from the business.
So how strong are its chances of surviving this period and bouncing back after the lockdown? That's unknown at present, but on Thursday Vansteenkiste said: “We anticipate that our highly supportive owners and lenders will make additional funding available to fund the administration period”.