THE future of a discount chain with 187 shops remains uncertain and stores are now at risk.
The Original Factory Shop (TOFS), acquired by private equity firm Modella Capital, has drawn up plans for a radical restructuring.
The ailing high street chain has drafted in advisers to explore a number of options including a company voluntary arrangement (CVA), according to Sky News.
Companies often turn to a CVA as a means to stave off insolvency, which could otherwise result in store closures or the collapse of the entire business.
A CVA provides struggling firms with an opportunity to explore strategies to safeguard their future, such as negotiating reduced rent rates with landlords.
It is understood that Modella Capital has enlisted advisers from Interpath to assist with the process.
Sources suggest that the firm is considering a CVA as part of a strategy to shutter an undisclosed number of underperforming stores in an effort to streamline operations and stabilise the business.
Any CVA that results in store closures would inevitably lead to job losses among TOFS’ workforce, which is estimated to comprise of 1,800 employees.
Details surrounding the proposed plans, including the timeline for initiating a CVA – a process requiring both court and creditor approval – remain unclear.
