The High Court has rejected Debenhams’ legal challenge over its recent Company Voluntary Agreement (CVA).

The department store was taken to court by Combined Property Control Group (CPC) - the landlord of six Debenhams stores in England - which argued that the CVA was “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”.

The action was financially supported by Mike Ashley’s Sports Direct, which dropped its own legal challenge against Debenhams in July.

Yesterday, a High Court judge rejected CPC’s challenge on four of the five grounds addressed. Debenhams said the remaining ground has been addressed by the deletion of a technical provision of the CVA relating to landlord forfeiture.

The ruling means Debenhams can now push ahead with its CVA, shutting down 22 stores by January 2020, with rent reductions or lease negotiations on a further 105 stores. It eventually close down 50 of its 166 stores as part of its CVA.

Debenhams chief executive Stefaan Vansteenkiste commented: “We are delighted that the court has today confirmed that our CVA is effective and will continue to be implemented as planned.

“Our proposals had unprecedented levels of support from our landlords, and this outcome is good news for our 25,000 employees, our pensioners and suppliers,” he continued, adding: “We retain the support of our lenders, and everyone at Debenhams can continue to focus on trading ahead of the important Christmas period.”

The CVA began soon after lenders took control of the business in April, when it fell into administration. The proposals were approved by creditors in May, with votes in favour meeting the required 75 per cent threshold.

Sports Direct had been Debenhams’ largest shareholder and attempted to gain control of the department store chain in the months leading up to the administration, staging a boardroom coup in January, unseating the retailer’s then-chief executive and chairman Sergio Bucher.

Sports Direct has around a 30 per cent stake, the value of which was wiped out by the administration process.

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