BHS announces CVA proposal

BHS announces CVA proposal

Will Wright comments on the company voluntary arrangement proposals in today's announcement by BHS Limited and BHS Properties Limited

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CVA proposal details

For full details of the CVA proposal for BHS Limited and details on how to submit a claim, please visit

For full details of the CVA proposal for BHS Properties and details on how to submit a claim, please visit

Commenting on the company voluntary arrangement (CVA) proposals in today's announcement by BHS Limited and BHS Properties Limited, Will Wright, restructuring partner at KPMG and proposed 'supervisor' of the CVA, said:

“For almost 90 years, BHS has been one of the most iconic brands on the UK high street, but in recent years has seen its profitability decline as it has sought to respond to changing customer behaviours, increased competition and the rise in omni-channel retailing. 

“Today’s CVA proposals are one facet of a wider turnaround plan, and specifically tackle one of the business’ largest fixed costs, the onerous lease arrangements across its UK-wide store portfolio.

“While the company’s store estate is located across favourable retail locations, a number of these leases are unsustainable, predicated on terms which were originally negotiated some decades ago. With the support of its lenders, shareholders and landlords, the company will be able to reshape its debt and operational structure to a model more suited to today’s multi-channel retail environment.  The company needs to secure at least 75% creditor approval for these CVAs.”

Brian Green, restructuring partner at KPMG and second proposed supervisor of the CVAs, added: 

“BHS currently has a total of 164 retail sites across the UK. Importantly, none of these stores will close on day one, and suppliers will continue to be paid on time and in full. The landlords of a total of 77 of the most viable stores will be retained at current rents which will be paid monthly as opposed to quarterly for three years. A further 47 stores have been identified as being viable at a reduced equivalent monthly rent of either 75% or 50%. 

“The remaining 40 stores will continue to trade for a period of a minimum of 10 months whilst negotiations with landlords are undertaken to reduce the rents substantially. Where rent reductions are achieved, these stores will remain open. It is hoped that the store closure number will be kept to a minimum.”

The key facets of the BHS CVAs are:

• The CVA proposal divides BHS’s 164 store portfolio into three main categories, based on the commercial viability and strategic importance of each site.

• A total of 77 Category 1 premises will be retained at current rents. For the next three years, rents will be paid monthly as opposed to quarterly.

• A total of 47 Category 2 premises have been deemed viable if a reduction in rent is obtained. To this end:

o The leases of 21 properties will be retained at a reduced equivalent monthly rent of 75% (Category 2A)

o The leases of 26 properties will be retained at a reduced equivalent monthly rent of 50%. (Category 2B)

• A reduced equivalent monthly rent of 25% will be paid for a minimum of ten months at a total of 40 Category 3 premises.

A detailed CVA proposal document is expected to be made available to BHS creditors via a dedicated website today.  The creditors will vote on the CVA on 23 March 2016.  KPMG will spend the next three weeks in talks with creditors to ensure they understand the full detail of the proposal.  


Notes to editors:

For further information on the CVA, please contact KPMG:

Katy Broomhead, Senior PR Manager 

T: 0161 246 4623

M: 07824 537963


Erfan Hussain, Head of Press Office

T: 020 7694 4208

M: 07768 043447


KPMG Press Office: 020 7694 8773

For further information on BHS, please contact:

Slate Campaigns

Jonathan Hawker

T: 0203 126 2865


Richard Oldworth / Charles Ryland / Helen Chan

T: 020 7466 5000


About company voluntary arrangements (CVAs)

Where a company is experiencing difficulties in paying its debts, the directors can propose a company voluntary arrangement (CVA) whereby the company enters into a legally binding agreement with its creditors, such as their suppliers or landlords.  In a similar vein to an individual voluntary arrangement (IVA), which gives an individual an alternative to bankruptcy, a CVA enables a company and its creditors to come to a compromise agreement and avoid an administration or liquidation.  A CVA can provide a company with some breathing space to allow it to reorganise or restructure its funding and/or its operations with as little disruption to the day to day trading as possible, with the control of the company usually staying within the existing management.

About BHS

BHS was established in 1928 and, today, is one of the UK’s most recognised high street brand names. The BHS Group performs on average 1,000,000 transactions a week across 164 stores and 74 franchise stores across 18 countries.  The Company offers stylish clothing and quality home products, representing excellent value for money with no compromise on quality.The business was acquired by Retail Acquisitions Limited “RAL” in March 2015. Shortly after acquisition, work on a turnaround plan was initiated which sought to restore the business to profitability.

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff.  The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such. 

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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