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DIY retailer Homebase is set to to announce plans to close 42 stores, putting about 1,500 jobs at risk.Restructuring company Hilco, which bought the DIY chain for
A CVA is a controversial insolvency procedure used by struggling firms to close underperforming shops.Restructuring experts at Alvarez & Marsal will carry out the CVA, which will require the support of landlords.Property owners are left out of pocket by CVAs, although the British Property Federation (BPF) said that in this instance, Alvarez & Marshal and Homebase had consulted with the landlords.
Business blunders
CVAs have been adopted by a number of retailers including New Look, Carpetright and Mothercare in recent months.Stephanie Pollitt, assistant director of real estate policy at the BPF, said: "These situations are never easy, as property owners need to take into consideration the impact on their investors, including those protecting pensioners' savings, as they vote on the CVA proposal."Homebase and Alvarez & Marsal have, however, demonstrated best practice, engaging with the BPF in the process and therefore ensuring property owners' interests have been properly taken into account," she said."Ultimately, it will be for individual property owners to decide how they will vote on the CVA, but the proposal has sought to find a solution that provides a sustainable future for Homebase."Wesfarmers bought Homebase in 2016 for ?340m and planned to rebrand the chain with its Bunnings brand.However, the Australian company admitted making a number of "self-induced" blunders, including underestimating winter demand for items such as heaters, as well as dropping popular kitchen and bathroom ranges.Catherine Shuttleworth of retail consultancy Savvy said Homebase was a business "under attack from all sides", with alienated customers finding "good alternatives in B&M, supermarkets' own home sections, Wilko and others".She added: "This will go down in retail history as an example of needing to know the market - retailing is not necessarily globally portable. Chucking out the management was an ill-advised decision."
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