Debenhams has urged Mike Ashley’s Sports Direct to drop its lawsuit over the department store chain’s controversial insolvency plan after a key landlord withdrew its legal action.
Sports Direct has filed a complaint against the company voluntary arrangement (CVA), which will allow Debenhams to close some 50 stores in a bid to stay afloat.
Ashley’s sportswear retailer saw its 29 per cent stake in Debenhams wiped out as a result of the rescue plan, and has launched a fierce campaign to take control of the chain.
But Debenhams has called on Sports Direct and Combined Property Control (CPC), which owns six Debenhams stores, to drop their lawsuits.
It came after another landlord, M&G Real Estate, agreed to withdraw its legal challenge.
“I am pleased that M&G has recognised the necessity for the CVAs and that as a result of the discussions we have had, it has withdrawn its challenge,” said Debenhams chairman Terry Duddy.
“I call on Sports Direct and CPC to do the same. If they do not, we will seek to have it thrown out. In the meantime, we continue to make good progress with the company’s restructuring plans.”
Debenhams has argued that the CVA was a vital step for the firm, which is scrambling to survive in a challenging retail environment. It said the legal challenges were “completely without merit” and should be dismissed.
Sports Direct declined to comment.