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House of Fraser has settled a legal challenge from landlords over plans to close 31 of its 59 stores next year.

The agreement – the terms of which are confidential – removes one obstacle as the troubled department store seeks a rescue deal.

The company’s store closure programme was announced in June but soon thrown off course when landlords issued a legal challenge, saying they were unfairly prejudiced by the process.

Creditors for House of Fraser approved the company voluntary arrangement (CVA), but landlords had started legal action filed in Scottish courts.

A spokesperson for the Joint Supervisors of the House of Fraser CVAs said: “The Joint Supervisors can confirm that there has been a settlement to the legal challenge to the House of Fraser CVAs.

This commercial settlement has been reached to avoid the costs of litigation, and allows the companies to continue its investment process without the CVAs being subject to the risk of further legal proceedings.

House of Fraser is one of a number of high street stores to seek controversial CVAs amid a rise in closures and failures.

Retailers have been hammered by Brexit-fuelled inflation, soaring business rates and falling consumer confidence.

Toys R Us and Maplin collapsed earlier this year, while the likes of Prezzo, Byron and Jamie’s Italian have shut restaurants and culled hundreds of jobs.