More than 20,000 workers at Debenhams fear for their jobs after the company began its third insolvency process in a year on Monday.
Bosses at the high street giant called in the administrators to stop suppliers who haven’t been paid taking legal action.
This puts the company under the management of accountants and protects bosses from having to pay debts in full. They hope that a spell of "light touch administration” will help them to buy it back with fewer debts after the coronavirus crisis.
Debenhams CEO Stefaan Vansteenkiste said the move would “protect our business, our employees and other important stakeholders”.
But a staff letter from Vansteenkiste, seen by Socialist Worker, tells workers the company “cannot give you any clarity” beyond the administration period.
And, even if Debenhams doesn’t collapse during the lockdown, the letter warns that “further restructuring actions may be needed”—meaning attacks on workers’ jobs and terms and conditions.
It says there is “currently no change” for workers who have been “furloughed”. This is the process where the government pays up to 80 percent of wages of workers who would have remained working if it weren’t for coronavirus.
But workers who haven’t been furloughed have to wait 14 days for a letter to see “whether your contract of employment will be adopted by administrators”.
One Debenhams worker, who did not want to be identified, says the situation is “very worrying and unsettling”. “Debenhams had already written to us to explain the ‘furlough process’ and to say that planned store closures would continue despite this dangerous situation,” they told Socialist Worker.
“Everyone is feeling very worried about what happens next.
“They could write to us again in a week’s time with worse news—where will that leave thousands of workers?”
The worker added, “The fact is Debenhams is owned by banks and hedge funds that have got the money to keep us all on."
Debenhams is a story of asset stripping and accounting tricks at workers’ expense.
The fact is Debenhams is owned by banks and hedge funds that have got the money to keep us all on
Vansteenkiste was himself the chief restructuring officer during a previous period of administration before being appointed CEO.
One year ago Debenhams went through a “pre-pack administration”, which saw the company bought up by its own lenders. They are a group of financial institutions, including Silver Point Capital, GoldenTree, Alcentra and Barclays.
Bosses used another form of insolvency, the Company Voluntary Arrangement, to get out of paying some rents. They then pushed through the closure of 20 high street stores—with plans to shut another 28.
Debenhams shows that bosses are continuing their usual policies of protecting profits at workers’ expense. Unions should fight to defend jobs, wages and terms and conditions—not declare “social peace”.