Debenhams has won a High Court battle with a landlord to secure its CVA, paving the way for the department store to shut 50 shops.
Sports Direct had funded the legal challenge brought by Combined Property Control Group (CPC), which operates six Debenhams stores.
Mr Justice Norris, who presided over the case, said the argument presented by Debenhams’ lawyer Tom Smith QC that CPC was “simply seeking to disrupt the CVA to their advantage of their paymaster, Sports Direct” was “entirely plausible”.
Smith had argued during the legal proceeding that Sports Direct was funding the challenge because it “wants to drive its principal competitor out of business” and “pick up its assets on the cheap”.
This ruling means that Debenhams will be able to proceed with its CVA to close 50 stores across its 166-strong estate and reduce rents on a further 100, which won support from over 90% of its creditors.
If CPC’s legal challenge had been upheld, Debenhams’ CVA could have been blocked, which may have resulted in the business falling into administration.
Debenhams chief executive Stefaan Vansteenkiste said: “We are delighted that the court has today confirmed that our CVA is effective and will continue to be implemented as planned. We note that the only aspect that the judge required to be adjusted was a technical provision of the CVA relating to landlord forfeiture provisions.
“Our proposals had unprecedented levels of support from our landlords and today’s outcome is good news for our 25,000 employees, our pensioners and suppliers. We retain the support of our lenders, and everyone at Debenhams can now focus on trading ahead of the important Christmas period.”
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