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Debenhams is to press ahead with a rescue plan involving the closures of more than 20 stores after fighting off a Sports Direct-backed legal challenge.
The judge Justice Norris on Thursday said he had rejected the challenge to the department store chain’s compulsory voluntary arrangement (CVA) on four out of five grounds.
Stefaan Vansteenkiste, the Debenhams chief executive, 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.
“Our proposals had unprecedented levels of support from our landlords and today’s outcome is good news for our 25,000 employees, our pensioners and suppliers. 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 involves the closure of at least 22 of Debenhams’ 166 UK stores in January 2020 and rent cuts on many other shops. It also wiped out the near 30% stake in the chain owned by Mike Ashley’s Sports Direct, which cost at least £150m to build up.
Sports Direct backed the legal challenge by a private Salford-based landlord owned by the family of property investor Aubrey Weis, which owns six Debenhams properties. Ashley’s retail group was blocked from taking legal action itself.
The legal action was the latest gambit in Ashley’s battle with the department store, which was taken over by a syndicate of banks and hedge funds to which it owed money. The CVA deal thwarted an attempt by the Sports Direct boss to take control .
Landlords and other creditors, such as clothing suppliers, approved the closures, which form part of two CVA deals that Debenhams’ new owners have said are necessary to prevent the business collapsing.
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