Sports Direct threatens legal action over Debenhams administration
Mike Ashley’s firm says the advisers were ‘conflicted’.
Sports Direct has threatened legal action against the administrators of Debenhams after the department store fell into the hands of lenders.
The company, led by Mike Ashley, has claimed FTI Consulting was conflicted due to its position as adviser to the company’s lenders and should not have overseen the pre-pack administration and sale.
In a letter to FTI, lawyers at RPC working for Sports Direct International (SDI) wrote: “Your firm was heavily involved in the events leading up to the appointment and the pre-pack and crucially in the failure by the company, its lenders and advisers to seriously engage with the SDI rescue proposals.”
Sports Direct has called for the administration to be reversed, calling it a “national scandal”.
If the process is not called off, the company has said it could take “further action”.
The administration process wiped out the holdings of all shareholders in Debenhams, including Mr Ashley’s near-30% stake.
It also cancelled plans for an emergency shareholder meeting in which Mr Ashley was to seek his appointment to the board and attempt to oust most other directors.
Mr Ashley had made offers to underwrite a rights issue for the company or buy its Danish business to help save it from administration.
But these were not deemed sufficient by lenders and the company was placed into administration on Tuesday before being transferred to their control.
The process does not affect trading or the group’s pension scheme, but it is expected to clear the way for as many as 50 store closures starting next year.