DEBENHAMS has turned to a corporate recovery specialist to spearhead its bid to return to financial health.

The embattled department store chain, which was seized by its lenders in a pre-pack administration deal in April after failing to refinance its mammoth debt pile, has appointed Stefaan Vansteenkiste as its new chief executive.

Mr Vansteenkiste, until now managing director at professional services firm Alvarez & Marsal, joined the chain shortly before the deal as chief restructuring officer, and since then has been working with executives on the turnaround plan.

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That will see the chain close further stores and cut jobs as it bids to stay viable amid challenging conditions on the high street.

Debenhams’ new owners revealed plans in April to shut 50 of its 166 stores by seeking support from landlords and local authorities for a Company Voluntary Arrangement (CVA) – a form of insolvency process – to cut rents and revitalise its balance sheet. The process puts around 1,200 jobs at risk.

The first stage of that process will see 20 of those stores closed in 2020. The location of those was announced in April, with the outlet in Kirkcaldy the only one in Scotland to be affected.

However, the CVA is opposed by Mike Ashley, whose Sports Direct saw its investment in Debenhams wiped out when the lenders seized control. None of shareholders in ‘oldco’ Debenhams plc, which included Sports Direct, are expected to realise any value from their investments.

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Mr Ashley, who failed in an attempt to take over Debenhams, is funding the challenge to the CVA from landlord Combined Property Control (CPC) Group. Debenhams argues that the CVA is a “vital step” which will allow it to adapt to the changing retail market and achieve sustainable growth.

It said more than 80% of stakeholders, including landlords, have supported the CVA, and notes that CPC’s action will not affect its implementation.

Mr Vansteenkiste succeeds former chief executive Sergio Bucher, who was voted off the board along with ex-chairman Sir Ian Cheshire in January as part of a boardroom purge led by Mr Ashley, then the group’s biggest shareholder with a near-30% stake.

Both Mr Bucher and Sir Ian failed to be re-elected at the retailer’s annual meeting, with Dubai-based Milestone Resources joining Sports Direct in opposing the resolutions. While Mr Bucher carried on as chief executive, Sir Ian stepped down immediately and was replaced by Terry Duddy.

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Mr Bucher then resigned in the wake of the pre-pack deal.

Prior to going into administration, Debenhams’ net debt had stood at £286 million on January 5, with the retailer also then having committed debt facilities of £520m.

Mr Vansteenkiste, a former chief executive of Holland’s Intertoys chain and food group Vion, said: “The retail industry faces a challenging environment and everyone at Debenhams acknowledges that. But we have a clear plan and Debenhams has a great team of people who are committed to delivering it. I am very excited about Debenhams’ strong prospects and with a restructured balance sheet there is a robust platform from which to build a turnaround, based on Debenhams’ clear brand focus, broad customer reach and differentiated product offer.”

Debenhams also announced yesterday that Mr Duddy will step down from the board in September after working with Mr Vansteenkiste to ensure an orderly handover.

Mr Duddy said: “The board welcomes Stefaan’s appointment as CEO. We concluded that he is the right person to take the business forward into the next phase of its recovery. Stefaan has already made a strong contribution since joining Debenhams, and has the support of our investor consortium to drive forward our turnaround plan.”

Prior to entering administration in April, Debenhams plc had announced plans to close 50 stores as it looked to make savings of £80m a year. However, talks aimed at refinancing debt were unsuccessful, allowing its lenders to take control.