The Original Factory Shop (TOFS) has become the latest retailer to launch a CVA amid harsh retail conditions, Retail Week can reveal.

The value department store group may shut more than 10% of its stores – 32 out of 224 branches.

The retailer’s owner, private equity house Duke Street, has negotiated a new financing deal with lenders, which involves an injection of £10m of new money and a debt write-off.

However, that must be accompanied by cost reduction “to put the business on a stronger and more stable financial footing to ultimately drive its growth strategy and plans”, a spokeswoman said.

Rent is TOFS’ greatest cost and the retailer aims “to reset the rents paid across the estate to levels nearer the current market rate” and to exit some unprofitable stores.

The retailer said it is confident that if the CVA wins approval it will be “well positioned to deliver on the new growth plan” initiated by chief executive Emma Fox, who joined from Halfords last summer.

TOFS is one of several retailers to have undertaken CVAs this year. Carpetright and Mothercare have both used the insolvency process to restructure after tough trading.

CVAs have stoked controversy, however. Department store group House of Fraser drew landlord fury for the way it conducted its CVA, for which it nevertheless won approval last week.

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