Icelandic retail investor Baugur, which holds stakes in British retail names including House of Fraser and Debenhams, has applied for bankruptcy protection.
It is hoping to entering into a moratorium process, which is similar to the US Chapter 11 bankruptcy protection process.
If the court grants a moratorium, the company will get three weeks’ protection from creditors, which can be extended by the court for up to six months.
In a statement the company said: “Baugur Group and a number of its wholly-owned subsidiaries have applied to the District Court in Reykjavik to enter into the moratorium process. This action has been taken in order to protect the group’s assets as well as the interests of all creditors.”
Baugur has made the move after restructuring efforts with its banks collapsed. Landsbanki, Baugur’s main bank , has applied for Baugur’s UK arm to be put into administration.
Baugur’s stakes in British retailers may now be sold. However, House of Fraser, of which Baugur owns a third, said in a statement: “During these difficult times, it is important to clarify the independence of House of Fraser and to emphasise that Baugur is a minority shareholder and has no impact on the strength of the business, or its day-to-day operations.”