Debenhams has won a High Court battle with landlords to push through its CVA proposal that will lead to store closures.
Sports Direct owner Mike Ashley had funded the landlords’ case after his significant shareholding was wiped out when Debenhams went private in a rescue deal.
The struggling department store today successfully fought off the legal challenge, which threatened its restructuring plan that is set to result in 50 store closures.
It is also set to slash rents at 100 sites, both prospects at which landlords balked.
While billionaire Mike Ashley’s Sports Direct withdrew its own legal challenge to the CVA in July, it still backed the Combined Property Control Group (CPC) case.
Debenhams said the legal case failed on four of five grounds, and the last was addressed by deleting a “technical provision” in the CVA.
Stefaan Vansteenkiste, chief executive of Debenhams 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.”
Debenhams secured 80 per cent of its landlords’ support for its restructuring strategy after lenders took it private.
Sports Direct had sought to wrestle control of the department store chain with a £200m bid that would have installed Ashley as head of the company, but Debenhams rejected the bid.
It had lined up professional services Big Four member Deloitte to handle a possible administration if it had lost the court case today.
More to follow.