Mike Ashley has stepped up his battle with Debenhams by launching a legal challenge to an emergency restructuring of the department stores chain.
Debenhams said yesterday that it had received applications contesting its company voluntary arrangements from parties including Mr Ashley’s Sports Direct.
It is understood that Debenhams has received two legal challenges and that the second has been submitted by M&G, one of its landlords.
The retailer put two CVAs before its creditors, including landlords, last month, with one receiving 97 per cent backing and the other 95 per cent approval. Each needed 75 per cent support to pass.
A CVA is an insolvency procedure that allows a retailer to close shops and pay less rent. The arrangements will allow Debenhams to close 22 of its 166 stores next year and to lower rents on more than 100 others. Debenhams, which was established 241 years ago, has come under pressure as shoppers move online and it needs to cut costs.
In April, Debenhams’ lenders took control of the business after it fell into a pre-pack administration that wiped out its shareholders. The biggest shareholder was Sports Direct, which had been scrambling to put together a deal to avoid the pre-packaged sale.
In the months before that, Mr Ashley’s company had been at loggerheads with Debenhams over the chain’s future. Mr Ashley, 54, has become one of the most powerful men on Britain’s high streets after he expanded Sports Direct from a single shop in Maidenhead that opened 37 years ago.
It is not known on what grounds Sports Direct and the landlord are contesting the restructuring. Terry Duddy, 63, executive chairman of Debenhams, said: “We believe the challenges to the CVAs to be without merit and will vigorously defend them.”
