Sports Direct wants to ‘eliminate’ Debenhams, court hears

The boss of Shirebrook-based Sports Direct wants to “eliminate” struggling retailer Debenhams, a court has heard.

Mike Ashley has funded a law suit brought to try and overturn a CVA which Debenhams successful gained approval for earlier this year. Then, the company was bought out of administration in a pre-pack deal, thwarting Ashley’s attempts to increase his stake and take control.

The court case is being fronted by Combined Property Control Group (CPC), the landlord of six Debenhams stores. Ashley is reported to be providing the financial backing for CPC’s claim.

A court hearing yesterday saw Debenhams’ barrister, Tom Smith QC, say he thought Sports Direct was backing the case to “drive its principal competitor out of business” with the loss of thousands of jobs.

He added that Sports Direct appeared to want to “drive Debenhams into administration so that it can pick up its assets on the cheap”, [which] “would be consistent with Sports Direct’s recent modus operandi”.

CPC says the CVA is “designed to create a situation in which the company’s general body of unsecured creditors is paid in full at the expense of certain landlords and local authorities”.

Daniel Bayfield QC, representing the landlords, said that the CVA was void as it “goes beyond the jurisdiction” set out in the insolvency act and that it “unfairly prejudices the interests of the applicants”.

A Debenhams spokesperson said: “We remain extremely confident this challenge is without merit and expect it to fail.

“In the meantime, we are progressing with our restructuring, which was approved by the vast majority of creditors, including 80% of landlords.”