UK stationery retailer Paperchase could close up to 28 of its stores as it looks to renegotiate leases with its landlords.
In January, it was reported that Paperchase was considering a CVA (Company Voluntary Arrangement), a move that would give it some breathing room to try and reduce store rent costs amidst falling sales and a credit insurance squeeze.
A CVA proposal is now being put forward under the supervision of KPMG that proposes sales-based rents to be implemented on almost half of Paperchase’s 145 stores in the UK.
A further 28 stores will have their rents reduced by 50% for three months, after which there will either be a rent-free period or store closure. It is the futures of these 28 stores which are most in doubt, and it is expected that at least five of these will close.
According to reports, a financial restructuring has been agreed with Paperchase’s lenders on condition that the CVA is approved.
The retailer’s creditors will vote on the CVA on 22 March.
