L Brands UK Division Files for Creditor Protection
Victoria's Secret UK division filed for protection from creditors on Friday and could result in the sale of the business, according to the Wall Street Journal.
L Brands is invoking the “light-touch administration.” Similar to filing for bankruptcy, this method offers temporary protection for a business against creditors. However, it is different than a bankruptcy filing because it allows management to maintain control of business operations. The UK division employs over 800 people and operates 25 stores that have been shut down for weeks amid the coronavirus pandemic.
The company stated that this move may result in asset sales or restructuring. The UK division posted an operating loss of $214 million as of February 2019. However, this move won't affect L Brands outside of the UK. The UK division has been in business since 2012, but the company mostly operates in North America.
Private-equity firm Sycamore Partners recently abandoned taking Victoria's Secret private, leaving the company without a dire cash influx amid the pandemic. Parent company L Brands is also facing a grim business environment and has furloughed most of its workers during the pandemic.