Mamas & Papas landlords approve CVA safeguarding its future

Creditors have voted “overwhelmingly” to approve the CVA, overseen by Deloitte at a meeting in central London this morning.

Mamas & Papas chairman David Scacchetti said: “This is an important milestone for us. The proposals agreed today not only enable us to cut costs and ensure a profitable retail portfolio but will also create a platform to allow us to continue offering innovative, premium products to customers in the UK and internationally, both in stores and online.

“I would also like to take this opportunity to thank our creditors for their support during this difficult time. Alongside the recent investment from BlueGem, the strengthened leadership team and the support of our colleagues, we are confident we are taking the steps necessary to protect the Mamas & Papas brand and help it to achieve its future potential.”

The CVA was launched following a strategic review launched earlier this year by the Huddersfield-based company.

A consultation process with all staff is also under way to improve the operational efficiency of the company

Mamas & Papas, which trades from 63 UK stores, had warned landlords that it was “very likely” it would fall into administration if the CVA was not passed and creditors would only receive a penny in the pound.

The approval of the CVA will lead to 19p to 21p recovered, at the lowest estimation, according to a letter sent out by the retailer.

Mamas & Papas classed 25 stores as “currently unviable”, and demanded a 50% rent reduction from landlords of those shops.

It asked for a 25% discount on a further 10 stores, which it said are “significantly underperforming”.

Mamas & Papas, which drafted in retail veteran Derek Lovelock as interim chief executive last month, sold a majority stake to Blue Gem in July.

The retailer recorded EBITDA losses of £8.6m for its year to March 31, 2014. Founder David Scacchetti secured loans of £5m and £4m last year to enable it to continue trading despite the losses, but when the group breached its banking covenants in March it sought third party investment.