CR-2025-004622 - [2025] EWHC 2276 (Ch)

Fecha: 08-Ago-2025

Addressing the problem

Addressing the problem

The boards of the Plan Company and of the Group formulated and intend to implement “a transformation plan” to reshape the business to align it with current trading conditions. This transformation plan involves operational improvements, cost rationalisations (there has already been a reduction in headquarters staff) and strategic investment (particularly in the refurbishment of stores and an upgrade in IT). The restructuring plan submitted for sanction forms part of that exercise.

The boards have undertaken a detailed analysis of the retail operation. The primary metric has been store profitability: the touchstone is a minimum profitability threshold of £100,000 (or 10%) after allocation of central costs in order to justify the requisite investment. This has been ascertained by reference to FY24 performance reviewed in context i.e. adjusted for the effect of any special factors. This has then been compared with the forecast for FY25. This data has then then been mapped by reference to the location of each store (High Street, shopping centre, retail park, et cetera including overlapping catchment areas) in order to make a genuine assessment of the prospective commercial viability of the unit. For each unit the passing rent has then been compared with the estimated rental value in the current market. Account has then been taken of the physical condition of each unit in order to assess the investment required to induce the necessary turnaround.

This exercise has established the following:

(a)

there are nine stores which are straightforwardly loss-making after attribution of direct central costs;

(b)

there are 24 stores that are marginal on that basis but are on a downward trend and, being in sites where customers no longer shop, keeping them open would divert resources from more profitable locations;

(c)

for these two categories of store ultimate closure is planned after the end of the Christmas 2025 trading period;

(d)

there is then a tranche of 71 stores which are in suitable locations and could be made viable in the long term if short-term reductions in cost could be achieved, the measure of the reduction required being calibrated by reference to their prospective viability;

(e)

for this tranche of stores amendment of lease terms is proposed, for most (but not all) a rent concession period of 36 months from the Effective Date of the plan;

(f)

this leaves 97 UK based units (including the headquarters and distribution centre) which will continue on present term and so are excluded from the scope of the plan, together with 22 units located in Ireland (excluded on jurisdictional grounds).

The methodology is familiar and has been adopted in other retail rescues: but it is important for the Court to be sure that it has been conscientiously applied. Having considered the evidence, I am so satisfied.