Debenhams sees off legal challenge to CVA plans

Debenhams

Opponents of rescue plans by store chain Debenhams have failed in their bid to block the group’s proposed CVA (company voluntary arrangement).

More than 90% of Debenhams creditors agreed to the CVA in May, involving the closure of 50 of its 166 stores.

But landlord Combined Property Control Group went to court in a bid to block the deal, funded by Mike Ashley-owned Sports Direct, whose significant shareholding in Debenhams was wiped out when the group went into administration.

The case began in the High Court on September 2, and today Mr Justice Norris ruled that four of the five grounds in Combined Property’s action had failed and the CVA was “valid and remains enforceable”.

Had Combined Property won, Debenhams would likely have been put back into administration.

But the group said it will now press ahead with its plans.

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.”

The judge in the High Court criticised Sports Direct’s involvement in the application.

He said it was “entirely plausible” that Mr Ashley wanted to buy Debenhams to get “an advantageous price” or “the elimination of a competitor to House of Fraser”, which the business tycoon bought last year.

He also said it was plausible that Mr Ashley went to court “to pursue his grievance at the manner in which his attempt to acquire Debenhams pre-administration was frustrated”.

A hearing into the costs of the case will be held at a later date, although Combined Property has been granted leave to appeal the ruling

Sports Direct is yet to comment.

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