Lenders to House of Fraser (HoF) are demanding that its Chinese shareholder injects fresh funding into the struggling department store chain as it finalises a rescue plan that would see dozens of its high street outlets close.
Sky News has learnt that lenders and their advisers at EY have expressed frustration at a lack of clarity over new financing for HoF, just days before it is due to seek creditors' backing for a restructuring deal.
The retailer will try to launch a Company Voluntary Arrangement (CVA) next week to pave the way for store closures despite opposition from some of its landlords.
HoF's senior lenders, HSBC and Industrial & Commercial Bank of China, are said to be demanding evidence that up to £70m of new capital, pledged weeks ago, will be injected into the business.
Talks have been taking place throughout this week and are expected to continue over the weekend, according to one insider.
Several sources said there was still doubt about whether agreement would be reached with the lenders in order for a CVA proposal to be launched, although one insider insisted that it was "on track".
Without it, HoF would face the imminent prospect of having to call in administrators.
In a statement issued on Thursday, an HoF spokeswoman said that "constructive engagement continues between all parties".
The company employs roughly 5,000 people directly, as well as about 12,500 staff who work in concessions in HoF stores.
The future of HoF, the history of which dates back to the 1850s, has been further clouded by a delay of up to two months to a transaction that will involve Hamleys' parent, the Hong Kong-listed C.banner International Holdings, buying a 51% interest in the UK chain.
A shareholder circular was supposed to have been issued by the end of May but may not now come until 26 July "as additional time is required for the company and various professional advisers to finalise the contents", it said.
HoF had informally asked store landlords to agree to big rent cuts earlier this year, before signing off plans to conclude a CVA before the June rent quarter day.
Such a restructuring would threaten hundreds more jobs at a torrid time for the high street, with jobs being axed at chains including Carpetright, Debenhams, Mothercare and New Look.
The CVA mechanism offers no guarantee of revival, however, with Toys R Us UK crashing into administration just weeks after its deal was approved, with more than 3,000 jobs lost as a result.
Retailers have become casualties of a tough market characterised by rising costs combined with caution among British shoppers.
HoF, one of the best-known names in the British retail industry, has been living a hand-to-mouth existence for some time, with its shareholders periodically providing it with multimillion pound sums to enable it to pay landlords and concession operators.
Last year, it lost nearly £44m as pressure mounted on the business.
The company is currently controlled by China's Sanpower Group, and carries hundreds of millions of pounds of debt, including a £350m bond which is publicly traded.
The department store chain has faced additional scepticism from the financial community because of the opaque nature of its ownership.
Just over 10% of HoF is owned by Sports Direct International, the UK-based retailer controlled by Mike Ashley, the owner of Newcastle United FC.
Mr Ashley has long been rumoured to be keen to pursue a merger of HoF and Debenhams, in which he holds an even larger minority stake.
The company is run by executive chairman Frank Slevin and Alex Wiliamson, who was brought in from the Goodwood Group last year.
The turmoil on the high street is not restricted to retailers, with Carluccios, Prezzo and Byron among the restaurant chains shutting significant numbers of outlets.
Should you block ads? Adblocker