Around 98 per cent of SRG’s landlords voted for the company voluntary arrangement (CVA), which will see them cut rents by 40 per cent at the group’s loss-making sites.
However, SRG will shut 42 of its 73 stores in 18 months’ time, including outlets in Portsmouth, Leeds and Birmingham. The jobs of 300 employees have been initially protected.
Richard Fleming at KPMG, which guided the 103-year-old chain through the process, said: “The approval of SRG’s CVA will come as a huge relief to the company and its stakeholders, particularly its staff. If the creditors had not supported the company’s turnaround plans, it undoubtedly would have faced administration.”
As well as the reduction in rents, landlords have agreed to collect money on a monthly rather than quarterly basis to make it more manageable. They have the option to take on new tenants for the stores marked for closure with 45 days’ notice.
SRG chairman Peter Lucas said: “The landlords have shown incredible flexibility in voting in favour of our restructuring plans and we are appreciative that they have met us halfway in securing [our] future. We look forward to a new chapter in the business’ development and we are confident the CVA will give Suits You a new lease of life.”
Sean Brew at real estate adviser DTZ observed that the attractiveness of the deal to landlords hinged on how easy the properties would be to re-let. “Where the property is in a prime location a landlord will take a harder view,” he said.