A MAJOR discount chain is preparing to undergo a restructuring plan that could place stores at risk.
, the new owner of the Original Factory Shop, is looking to launch a Company Voluntary Arrangement (CVA) at the chain, according to Sky News.
A CVA is a way of restructuring that means acan continue trading by negotiating its debts, such as cutting rent costs with landlords.
It is a common way for struggling businesses to try and stay afloat, with chains such asandhaving previously entered into one.
Sources said an announcement regarding the CVA could be made in the coming days, but the arrangement will require approval.
The move has placed uncertainty over the discounters portfolio of 187 high street stores, with the outlet adding it could lead to “significant” closures and job losses.
Modella is also looking to negotiate two-year rent-free at some shops in a bid to shore up costs.
It's important to note that any restructuring can mean a variety of different things, and for now, all shops are open for business as usual.
Flying Eze has approached the firm for comment.
It comes just two months after the private equity firm – which recently snapped up ‘s high street arm – bought The Original Factory shop.
Duke Street Capital, which had owned the company since 2007, attempted to offload the business in 2023 through Deloitte, but a deal never came to fruition.
While many bargain stores such as B&M and have seemed to profit from the crisis, The Original Factory store has struggled to stay afloat.
The retailer hasover the past 12 months,including sites in Great Harwood inand Invergordon,.
Despite the closures, the chain also opened 27 stores in 2024 and still has plans to continue its “store transformation” programme this year.
Here is a full list of stores that have opened since August 2023:
- Kirkintilloch – opened August 24
- Stonehaven – opened August 31
- Blandford Forum – opened August 31
- Haddington – opened September 7
- Wetherby – openedSeptember 7
- Nairn – opened September 14
- Ashbourne – opened September 14
- Castle Douglas – openedSeptember 21
- Penrith – opened September 21
- Inverness – opened September 28
- Attleborough – openedSeptember 28
- Ayr – opened October 5
- Ringwood – opened October 5
- Perth – opened October 12
- Lanark – opened October 19
- Peterhead – opened October 26
TROUBLE ON THE HIGH STREET
Many retailers are continuing to feel the pain of higher rents and shoppers having less to part with at the till.
Hikes tocontributions, imposed this month, have also added to business costs.
Last month, budget clothing chain went bust, leading to 35 .
Back in February,, closing 23 stores.
Elsewhere, Poundland's parent company Pepco is said to have hired advisory firm Teneo to oversee the sale of the UK.
It comes after Pepco “all strategic options” to separate from its brand.
The Polish group said it might turn its focus to its more profitable businesses in .
Pepco previously warned that upcoming hikes to employer NationalContributions (NICs) and national minimum wage would significantly add to its costs.
