Sports Direct ‘withdraws CVA challenge’
Written by Hannah McGrath
Mike Ashley’s Sports Direct has partially withdrawn its formal challenge to Debenhams’ plans to launch a Company Voluntary Arrangement (CVA), however the retail tycoon’s company remains involved in efforts to frustrate turnaround plans at the struggling retailer.
He launched a last ditch challenge to a £200 million restructuring plan last month after creditors voted through plans to close up to 50 stores and renegotiate rents in an attempt to put the company on a stable financial footing.
However, Debenhams announced that Sports Direct International (SDI) and Sports Direct.com had withdrawn as parties to the plans to launch the CVA as part of a restructuring plan announced in April.
Debenhams said that Sports Direct remains involved in efforts to resist the CVA, as the challenge, which was jointly brought by Sports Direct International and the Combined Property Control Group (CPC), is ongoing.
Debenhams stated that SDI is “continuing to fund the ongoing challenge by CPC and has agreed to bear any costs award eventually made against CPC and in Debenhams' favour at the conclusion of the challenge”.
The move marks the latest instalment in Ashley’s bitter battle to seize control of the future of Debenhams, after the CVA saw Sports Direct’s 30 per cent holding in the company wiped out.
A statement released by Debenhams, said the company, which fell into the hands of creditors as part of a rescue deal in April, would continue to defend the outstanding challenge as “being without merit”.
The company insists that the CVAs are a “vital step” for the retailer as it restructures to adapt to the changing retail environment.
Commenting on SDI’s formal withdrawal as a party to the challenge, Terry Duddy, chairman of Debenhams, 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 per cent of our creditors who supported our CVAs.”
He added: “I call on CPC to withdraw its action, which we will vigorously defend. In the meantime, we continue to make good progress with the company’s restructuring plans, which are a vital step in preserving as many as possible of the jobs of the 25,000 people who work for Debenhams.”
Sports Direct International has not responded to a request for comment.