Electra Private Equity, which owns the British footwear manufacturer and retailer Hotter Shoes, plans to downsize the company through a company voluntary arrangement (CVA) process.

A CVA enables an insolvent company to seek an agreement with its creditors. But, the arrangement has to be approved by creditors holding at least 75 percent of the value of the debt.

In a statement, Electra said that following the emergence of the Covid-19 pandemic, the management of Hotter has been in discussion with a number of its retail landlords to seek an agreement to reduce the number of stores to a level and cost that allows Hotter to remain viable. But, individual discussions have been unsuccessful to allow the company to continue viably, prompting it to enter into a CVA process in the ”coming days.” If the CVA proposal is approved and successfully implemented, it will leave the company with 15 shops, it adds.

Hotter has also entered into formal consultation with employees at its head office in Skelmersdale, West Lancashire, England, that may lead to a number of redundancies.

Electra’s chairman, Neil Johnson, says that  before the pandemic hit, Hotter, under its new chief executive, Ian Watson, ”was making good progress to accelerate the implementation of a digitisation strategy.” If the CVA is approved it will secure the future of ”a smaller, sustainable business” and will save over 350 jobs, he stresses.

The daily The Telegraph says it saw a letter by Watson stating that the company will be placed into administration if the CVA is not approved. The company was founded in 1959 in Lancashire and produced 1.6 million pairs last year, according to its website.