Sports Direct is to sue House of Fraser, claiming stakeholders were “denied information” regarding its proposed CVA.
The sports retailer, which owns an 11.1% stake in House of Fraser, is demanding to see the department store chain’s corporate plans after it revealed proposals to shutter around a third of stores.
Sports Direct owner Mike Ashley claims his company has been “repeatedly denied information to which it is legally entitled”.
A writ issued in the High Court demands that Sports Direct be given access to House of Fraser’s plans. Despite its stake in the department store chain, the firm does not have a seat on the board.
After months of turbulent trading, House of Fraser last week revealed a controversial plan to launch a company voluntary arrangement (CVA) in June, which would result in Hamley’s Chinese owner C.Banner acquiring a 51% stake in the retailer.
The funding is dependent on a successful restructuring of the business that would involve the closure of around 20 of House of Fraser’s current 59 department stores.
The restructuring plans have infuriated Sports Direct, which believes it has been “frozen out” by the board of the Chinese-owned company.
Sports Direct’s head of strategic investments Liam Rowley told the BBC: “Their dealings in China are opaque, and it is blatant that we have been unfairly prejudiced.
“We have no option other than litigation to protect the interests of Sports Direct and its shareholders.”