The creditors of British Home Stores (BHS) will today (Wednesday) vote on a crucial deal needed to avoid administration.
With debts of more than £1.3 billion and a pension deficit of £571 million, BHS needs to agree a deal to cut its rent bill across its 164 stores. If a deal cannot be agreed, one of the UK's best known High Street chains will likely fall into administration, putting 10,000 jobs at risk.
British Home Stores was bought by retail billionaire Sir Philip Green in 2000 for £200m, but he sold it for just £1 to Retail Acquisitions, a consortium of financiers, lawyers and accountants. BHS hasn't made a profit for seven years.
BHS chief executive Darren Topp said: "Although a difficult process to go through, this sets in motion the comprehensive updated turnaround plan.
The company needs 50% of its landlords and 75% of its creditors to agree to the deal. Landlords will receive "substantially reduced" rents, but it will allow BHS to continue paying something rather than it going bust and the landlords having an empty lot.
At least 77 of BHS' most profitable stores will remain at their current rent levels. The retailer is "seeking a reduction in rent to market levels" on 47 of its stores, with 40 of its least profitable stores continuing to trade for at least 10 months with ongoing negotiations to reduce rent.
However, BHS says that even if a deal is reached with landlords and creditors, it will still need to raise £100m to trade past 25 March.
Julie Palmer, retail analyst at insolvency experts Begbies Traynor, is confident a deal can be reached, but stressed it won't secure BHS' long-term future.
She said: "It is passing the buck essentially to the landlords - with promise of a reduced but continued rental income for the next 10 months."
Ms Palmer added: "It buys them time, but the fundamental issues still remain.
"What do BHS do, that nobody else does? If you look at homecare, Next do that better; and if you look at clothing, then Marks and Spencer do it better."