More than 30 Monsoon and Accessorize stores could shut under the retailer’s restructuring proposals even though the company has stressed its plans involve no immediate closures.

Monsoon’s proposed company voluntary arrangement, unveiled last week, envisages rent cuts of up to 65 per cent at 135 of its 258 stores. However, 36 of those will move to zero rent after a period of six months and could be closed at short notice by either the company or its landlords, according to a creditor document seen by the Financial Times.

The proposals will enable Monsoon “to have flexibility, and a period of time, to determine whether the premises can be financially viable in the circumstance”, the document stated. The stores affected include high-profile locations such as Bluewater in Kent, Eldon Square in Newcastle and Oxford Street, Regent Street and Westfield White City in London.

Landlords of the affected properties, which include Intu, Westfield and the Crown Estate, can give Monsoon 60 days’ notice to vacate the stores as soon as the CVA takes effect. But if they did so, they would see “dilapidations” reduced by 85 per cent. Dilapidations are the costs, paid by the outgoing tenant, of restoring premises to their original condition, and can be significant.

Monsoon said it hoped to avoid any closures and that the impact on landlords had been carefully considered. Their voting power will be greater than usual in schemes of this type, because their claims will be discounted by less than the customary 75 per cent, it added.

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The CVA is one of several recent schemes to have featured a low initial number of closures but the potential for many more stores to shut over the full duration of the plan. Arcadia’s complex set of CVAs envisaged just 23 immediate store closures but many restructuring experts expect the final figure to be higher. Debenhams will close 22 stores initially but is expected to shut more than 50 in due course.

Monsoon said it needed the CVA because of a looming £20m cash shortfall caused by the withdrawal of insurance cover for its suppliers and a demand by Barclays for cash collateral against a credit line. It said profits have also declined sharply since 2017, with a loss before interest, tax, depreciation and amortisation of £3m forecast for the 2019 financial year.

The plans have raised some eyebrows because Peter Simon, the company’s wealthy founder, is injecting little fresh equity into the business. However, the company rejected any comparison with Philip Green’s Arcadia, whose CVA was so controversial that it needed two attempts to secure approval.

“Peter Simon has been a careful and responsible steward of Monsoon and Accessorize. He has ensured it has always been conservatively financed and invested heavily in its retail estate and infrastructure,” Monsoon said.

“Since 2008 the company has invested more than £184m, principally in the store estate but also in its distribution and technology infrastructure,” it added. “This heavy investment continued between 2014 and 2017 when the business was loss making.”

Mr Simon took the company private in 2007, and has taken dividends of more than £100m since then — although the company said he has not received a personal dividend for five years.

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He has also agreed to provide an £18m loan to the company, in addition to £12m already advanced, written off £25m of inter-company indebtedness and halved the rent on the company’s head office, which he owns.



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