Sports Direct has withdrawn its legal challenge to Debenhams’ CVA – but will continue to fund the objection lodged by one of the department store chain’s landlords.
Mike Ashley’s group brought a joint challenge to the CVA alongside Combined Property Control Group (CPC), which owns six Debenhams stores, last month.
Debenhams said today Sports Direct has now withdrawn its challenge but was “continuing to fund the ongoing challenge” by CPC.
The department store operator said Sports Direct had “agreed to bear any costs award eventually made against CPC and in Debenhams’ favour” following the conclusion of the challenge.
Debenhams continues to defend the challenge and insists it is “without merit”.
Sports Direct has been approached for comment.
The sportswear giant had a nearly 30% stake in Debenhams wiped out when the chain went bust in April and fell into the hands of its lenders. Ashley called the pre-pack deal a “national scandal”.
The group of banks, which formed investment consortium Celine, failed to sell Debenhams and instead launched a CVA in a bid to slash its rents and rates liabilities, and shutter 50 stores.
Debenhams chair Terry Duddy said: “As Sports Direct has now acknowledged, it did not have sufficient interest to challenge the CVAs, as its businesses are not adversely impacted by the proposals and therefore had no legal basis for a challenge.
“However, by continuing to fund CPC’s challenge, Sports Direct is deliberately acting against the vast majority of Debenhams’ stakeholders, including the more than 90% of our creditors who supported our CVAs. I call on CPC to withdraw its action, which we will vigorously defend.
“In the meantime, we continue to make good progress with the company’s restructuring plans, which are a vital step in preserving as many as possible of the jobs of the 25,000 people who work for Debenhams.”
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