Steinhoff’s salvage process stalls as former partner digs in

Steinhoff International Holdings NV’s effort to rescue its European business has been delayed after a challenge from a company linked to Andreas Seifert, the beleaguered retailer’s latest opposition from its former Austrian partner.

LSW GmbH, “which says it’s a creditor of Steinhoff Europe,” is opposing a company voluntary arrangement proposed on December 14, and the agreement won’t be implemented until the challenge is resolved, Stellenbosch, South Africa-based Steinhoff said in a statement Friday. LSW is “an entity related to Andreas Seifert who has a dispute ongoing in the Austrian courts against Steinhoff Europe AG,” a Steinhoff spokeswoman said in an emailed response to questions.

Markus Jooste, Steinhoff’s ex-chief Executive Officer, last year said the global retailer’s near-collapse originated from a protracted dispute with Seifert. The legal battle, mainly over the valuation and ownership of German furniture chain POCO, led to investigations by European regulators and tax authorities that attracted the attention of Steinhoff’s auditors at Deloitte LLP, Jooste told lawmakers on September 5. He quit in December 2017 after the retailer’s board disagreed with his plan to replace the auditors.

Company voluntary arrangements, or CVAs, are a means used by financially distressed businesses to come to an agreement under UK law with unsecured creditors, often by getting more favorable property rental agreements and allowing some outlets to close before their leases expire.

The process can be an efficient way to reduce and rearrange debt when a majority of creditors approve, said Louise Parker, a London-based analyst at Bloomberg Intelligence.

However, “often a minority creditor will challenge the CVA process since they believe they are being unfairly treated, and will attempt to get other creditors to make the same move,” she said.

CVAs are becoming more frequent on the UK’s shopping districts, with Homebase becoming another in a list of retailers using the process to shutter outlets. Fashion retailer New Look, baby and children’s-wear chain Mothercare Plc and floor-coverings seller Carpetright Plc have turned to CVAs as they’ve closed dozens of stores.
 
 
 
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