Sports Direct scraps legal action over Debenhams’ closure plans
SPORTS Direct has abandoned legal action against Debenhams’ plan to shut some stores, but is continuing to fund another objecting landlord.
After the department store chain fell into administration in April, wiping out shareholders, Debenhams’ creditors approved closing 50 of its 166 shops and reducing rent on more than 100 in a company voluntary arrangement (CVA).
Restructuring proposals put about 1,200 jobs at risk, but have been backed by the majority of creditors. However, Sports Direct and Combined Property Control, which owns six Debenhams stores, have continued to agitate.
Terry Duddy, Debenhams chairman, said the sportswear retailer now acknowledged that it “did not have sufficient interest to challenge the CVAS, as its businesses are not adversely impacted by the proposals”.
But he added: “By continuing to fund CPC’S challenge, Sports Direct is deliberately acting against the vast majority of Debenhams’ stakeholders, including the more than 90pc of our creditors who supported our CVAS. I call on CPC to withdraw its action, which we will vigorously defend.”
Sports Direct held a near-30pc stake in Debenhams prior to its collapse and is estimated to have lost £150m. Its founder Mike Ashley tried to derail the pre-pack administration, offering a loan, to buy its Danish arm for £100m and underwrite a £200m rights issue. Sports Direct said it had made “repeated, prolonged and varied attempts and proposals to rescue the company as a going concern”, but that Debenhams, its lenders and advisers “did not appear to share that goal”. Mr Ashley has branded the collapse of Debenhams a “national scandal”.
M&G Real Estate, owned by Prudential, has already abandoned its legal challenge after “constructive” talks.