Legal tackle forces Sports Direct to take indirect route for Debenhams challenge
Mike Ashley’s Sports Direct business has withdrawn its direct challenge to Debenhams’ restructuring, but is now funding the protest being led by another investor.
High street retailer Debenhams was in a protracted and public battle for control with Ashley, who has been on his own shopping spree of retail brands including House of Fraser and Game in recent months.
Ashley, along with other shareholders, was hit heavily when Debenhams entered administration in April.
A company voluntary arrangement (CVA) which shut 50 stores and reduced the rent on nearly all of the remaining 116 was backed by creditors.
But Sports Direct and Combined Property Control Group (CPC) – which owns six Debenhams stores – have continued to challenge the retailer’s plans. However Newcastle United owner Ashley has been forced to change his tactics.
Debenhams chairman 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.”