Mothercare has announced the proposed company voluntary arrangement (CVA) for its subsidiary, Childrens World, has not been approved.
Childrens World, a UK-based clothing, toys and nursery equipment retailer, was acquired by Mothercare in 1996. Its 21 stores trade under the Mothercare fascia.
On 1 June more than the required 75% of Mothercare UK creditors approved the retailer’s CVA proposals, under which it will close up to 50 stores and receive rent reductions on a further 21.
It has now revealed that only 73.3% of creditors approved proposals for a CVA for Childrens World, which accounts for an additional 21 stores.
Creditors voted separately on CVA proposals for three subsidiaries of the Mothercare Group: Mothercare UK, Early Learning Centre, and Childrens World.
In a statement, released on 4 June, Mothercare said: “After a rigorous post-meeting review of the voting documentation in relation to Mothercare’s non-core subsidiary Childrens World, the independent CVA nominees have concluded that the proposals failed to be approved by the necessary 75% majority of unsecured creditors, by a very narrow margin at 73.3%. Accordingly, the Childrens World CVA proposal will not progress further.
“The directors of Mothercare and Childrens World are considering all options in respect of Childrens World as a legal entity, and a further announcement will be made in due course as required. ”
The company said the CVA proposals and/or any restructuring of Childrens World are “not expected to affect the ordinary course of operations of Mothercare”, which continues to trade as a going concern under the control of its directors.
It said all other details as set out in the announcement of 1 June remain unchanged, and it continues to expect its refinancing deal to be completed as previously announced.
Mothercare’s interim executive chairman Clive Whiley said: “KPMG have confirmed the votes relating to Mothercare and Early Learning Centre’s CVA’s passed by a clear majority. However, it is now clear that the CVA of Childrens World was not carried by creditors by a narrow margin. This will neither unsettle the UK restructuring and refinancing, nor jeopardise our future transformation plans, which are already underway.
“As a board we are now considering our next steps with respect to Childrens World.”