Putting an end to the speculation and escalating worries, it was announced earlier his week that Paperchase is launching a CVA (Company Voluntary Agreement) which will result in reducing its rental costs and shutting “a small number” of its stores.
The CVA proposal, which is scheduled for a vote on March 22, will need to be approved by over 75% of creditors for it to be put into action.
Timothy Melgund, Paperchase’s deputy chairman, has given assurances that greeting card publishers supplying the retailer will be paid to the agreed terms. He also confirmed that all suppliers’ outstanding invoices have now been settled.
He accepts that going for a CVA is “quite a step”, but highlights that importantly it “has the full financial backing of our major investor and one that provides a clear path through the current imbalance between prevailing retail occupation costs and current market performance.”
When pressed for clarification as to how many Paperchase shops are likely to close as a result of the CVA, Timothy says the process means that there is no definitive answer as yet.
“We will definitely close five, but the way CVAs are structured now gives landlords the opportunity, in most cases, to resume control of any particular store should both parties not be able to agree acceptable terms to move forward,” explains Timothy.
“Now we have the CVA in place we will continue to pay suppliers to terms and will continue to push forward with the Paperchase brand with renewed vigour and purpose,” he stated.
He said both Paperchase’s international businesses and its relationship with Next in the UK will also “continue to develop and grow.”
News that Paperchase had appointed KPMG in January to explore different possible options for the design-led retailer sent shockwaves through the greeting card industry, not only as the multiple is an important retail stockist for many card publishers, but as it has also be long held up as a beacon for greeting card and stationery retailing, renowned the world over.
As one publisher told GiftandHome.net: “A CVA is not ideal, but it really is a ‘least worst’ scenario given the other possible outcomes.”
Top: Paperchase is going for a CVA.
