Clarks creditors approve CVA opening door to new investment

The footwear specialist said the CVA was approved by more than 90% of creditors today, which should in turn now allow for Hong Kong-based private equity firm LionRock Capital to complete its £100m acquisition of a majority stake in the retailer. 

LionRock Capital’s takeover of Clarks is still “subject to shareholder approval and the successful completion of a 28-day challenge period on the CVA”.

Clarks chief financial officer Philip de Klerk said: “I am very pleased that the CVA was approved today. This is a significant step towards the formation of our new partnership with LionRock Capital.”

Deloitte partner Gavin Maher, who helped lead on the administration process, said: “The approval of the CVA is an important milestone for Clarks, enabling the business to move forward.

“The CVA, together with the proposed investment from LionRock, will provide a stable platform upon which the management’s transformation strategy can be delivered.”

As Retail Week revealed in early November, Clarks have separately placed all 3,969 of its shopfloor workers into consultation.

Clarks said the proposed changes, which will not apply to its franchise stores, were designed to streamline store management teams “to improve efficiency” and “enhance” its customer service credentials.

Sources told Retail Week the roles of assistant manager and team leader will be made redundant in the majority of its 320 UK stores, but added that the 30-day consultation would involve all shopfloor staff.

The coronavirus crisis has only added to what has been a turbulent period of trading for Clarks.

The retailer, which was established in 1825 and is still owned largely by members of the Clarks family, slumped to an £83m loss in 2019.

British Property Federation boss Melanie Leech lashed out at the approval, calling it ”everything that is wrong with UK insolvency legislation”.

”Far from being treated as valuable economic partners with an interest in the ongoing success of Clarks, individual property owners were not given any meaningful opportunity to engage, on behalf of the savers and pensioners they represent, before the CVA was launched and yet they are the only class of creditor being asked to permanently and irrevocably write down what they are owed. And, this decision has been voted through by parties that are largely unaffected by the CVA,” she said. 

Revo chief executive Vivienne King agreed. She said: ”During the pandemic Clarks has benefited from the furlough scheme and business rates holiday and still it has been failed by its management.

”It is outrageous that it is landlords who are expected to face the consequences and prop the business up financially, having already received no rent since March and with arrears largely written off and no prospect of a meaningful income in the near term. How many more of our iconic brands are going to manoeuvre out of their contractual commitments?”