Sports Direct launches challenge to Debenhams store closure plans
The department store said it would ‘vigorously defend’ the plans.
Mike Ashley’s Sports Direct has launched a last-minute legal challenge to restructuring plans at Debenhams which are set to see 50 stores close.
Debenhams confirmed that it had received applications from parties including Sports Direct to challenge the company voluntary arrangement (CVA) which was approved last month.
The opposition comes at the 11th hour, just before the standard 28-day challenge period closed on Monday night.
The plans were voted through by creditors on May 9, giving the green light to as many as 50 store closures as well as lower rents on more than 100 outlets.
Terry Duddy, executive chairman at Debenhams, said: “We believe the challenges to the CVAs to be without merit and will vigorously defend them.
“Given the overwhelming support for the proposals from creditors, including over 80% of landlords, this is an unnecessary distraction as we implement our restructuring plans.”
Mr Ashley failed in his attempts to take control of the department store prior to its collapse and subsequent sale in April.
The tracksuit tycoon slammed the pre-pack administration of the retailer, which saw it fall into the hands of its lenders, as a “national scandal”.
The new owners of Debenhams, operating under the name Celine UK NewCo 1, said: “We note the spurious challenges to Debenhams’ CVA proposals, which were approved by the vast majority of landlords and more than 90% of all creditors.
“We will move forward with our debt restructuring process as expected.
“The CVA provides a platform to deliver a turnaround in the business for which the lending group has committed £200 million of new funding and remains supportive.”
Sports Direct had previously threatened to take legal action over the administration of the chain, claiming that FTI Consulting was conflicted due to its position as adviser to the company’s lenders and should not have overseen the process.
However the company has been relatively quiet on Debenhams until now, turning its attention instead to a £51.9 million takeover bid for Game Digital.
Sports Direct representatives have been contacted for comment.