A DEPARTMENT store has settled a legal challenge from landlords over plans to close more than half of its stores.

Bosses at House of Fraser intend to push on with plans to close 31 of 59 stores after an agreement, the terms of which are confidential, was reached.

The agreement removes one obstacle as the troubled department store seeks to implement its rescue deal.

House of Fraser's Darlington and Middlesbrough stores are among those listed for closure in early 2019, resulting in hundreds of North-East job losses.

But last week, Darlington Borough Council's deputy leader Chris McEwan said he was "optimistic" that the town's iconic Binns High Row store could remain open.

However, Cllr McEwan admitted the future remained "very grim".

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."

Speaking last week, Cllr McEwan said: "I am optimistic that we have a fighting chance of having a department store and a House of Fraser in Darlington.

“There are lots of factors to take into account, and how the store trades in December and into the New Year could be crucial for its future.

“Let me be very clear, the future still looks very grim but we cannot give up hope until it is done.

“We also need people not to give up on the town centre, and we need to recognise that we have some great independent retailers."

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.

Alex Williamson, chief executive of House of Fraser, previously described the CVA as the "last viable" option for the business.