UK flooring retailer Carpetright is planning to shut 92 stores in the country as part of its financial restructuring.

The company will also implement a company voluntary arrangement (CVA) to counter the insolvency proceedings regarding the store closure.

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Carpetright has taken this decision as it is struggling to adapt its business model over the last four years.

Deloitte’s Matthew Smith and Neville Kahn were appointed as the company’s joint nominees in relation to the proposed CVA.

Currently operating 400 stores in the UK, the retailer identified 205 locations as underperforming, with 92 closed and 113 retail sites will see revised lease terms.

The CVA also proposes rent reductions for the 113 underperforming sites that are marginally profitable.

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“The ‘tough but necessary actions’ were due to the company’s burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents.”

Apart from this, the company also plans to raise £60m in net equity capital by next month.

The amount will be invested in the company’s ongoing strategy to reduce indebtedness and cover the costs of the CVA.

Carpetright CEO Wilf Walsh said: “The ‘tough but necessary actions’ were due to the company’s burden of a legacy UK property estate consisting of too many poorly located stores on unsustainable rents.

“Completion of the CVA and equity financing will enable us to establish an appropriately sized estate of modernised stores, on economic rents, complemented with a compelling online offer, enabling Carpetright to address the competitive threat from a position of strength.”

Delloite’s representatives along with the retailer engaged the British Property Federation (BPF) to assist site owners of the 113 sites regarding rent reductions.

The company is currently seeking approval from its creditors and shareholder for the CVA proposal, and will raise the £60m after implementing it.