Debenhams has gone into administration after the coronavirus lockdown forced stores to close

Thursday, 9th April 2020, 3:21 pm
Updated Thursday, 9th April 2020, 3:59 pm
The department store has had to shut its 142 locations across the UK (Photo: Shutterstock)

Debenhams has confirmed it has formally entered administration for the second time this year, after being hard hit by the current coronavirus lockdown.

The department store has appointed administrators from the FRP Advisory to oversee the process, following a notice of intent to appoint administrators on Monday (6 Apr).

Why is Debenhams entering administration?

The department store made the decision to enter administration in an effort to protect both the business and staff during the current lockdown, with the intent to resume trading once restrictions are lifted.

Debenahms’ 142 locations across the UK remain closed in line with government guidance, with the majority of its 22,000 staff currently on furlough.

The retailer said it will work to reopen and trade as many of its stores as possible.

However, its Irish business, which runs 11 stores with around 1,400 staff, will cease trading as part of the move.

Stefaan Vansteenkiste, chief executive officer of Debenhams, said: "In these unprecedented circumstances the appointment of the administrators will protect our business, our employees, and other important stakeholders, so that we are in a position to resume trading from our stores when Government restrictions are lifted.

"We anticipate that our highly supportive owners and lenders will make additional funding available to fund the administration period.

"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."

Can I still shop online at Debenhams?

Debenhams is continuing to trade online across the UK, Ireland and Denmark.

Customer orders, along with gift cards and returns, are still being accepted and processed as normal.

What happens if I have a Debenhams store card?

Customers who have a Debenhams gift card can still spend it online, although the cards cannot be exchanged for cash or vouchers.

It is also unlikely that you will get a refund on the gift card.

If a company goes into administration, it is the responsibility of the administrator to decide whether or not it will allow gift cards to be used.

The terms and conditions on Debenhams gift cards warns that the funds are not covered by the Financial Services Compensation Scheme and in the "unlikely event of the issuer of this product becoming insolvent, some funds on the card may not be available to spend".

"There is no right to cancel an online gift card order once the gift card has been spent in full or in part,” it adds.

What will happen to its employees?

The bulk of Debenhams' employees are currently being paid under the government’s emergency coronavirus scheme, meaning they will receive 80 per cent of the annual wage, up to a maximum of £2,500 per month.

The department store was forced to stop trading after the Prime Minister announced a UK lockdown on 23 March, with the measures initially put in place for a period of three weeks.

Debenhams said it has the support of its lenders to enter administration, and employees and suppliers are being kept informed over the move.

The retailer has closed 22 shops in recent months as part of its plans to close 50 sites, bringing its total number of locations to 110.

A further 28 stores are expected to close in the next 12 months.