Debenhams confirms Ashley has launched CVA challenge
today Jun 12, 2019
Sports Direct boss Mike Ashley had threatened legal action over the way Debenhams plc went into administration in early May and he lost his entire stake in the company, and now Debenhams has confirmed that the legal action is happening.
The company said that applications to challenge its CVAs have been received “from parties including Sports Direct International plc.” It has been reported that the second challenge has been received from M&G, one of Debenhams’ landlords.
Terry Duddy, Debenhams Executive Chairman, said: "We believe the challenges to the CVAs to be without merit and will vigorously defend them. Given the overwhelming support for the proposals from creditors, including over 80% of landlords, this is an unnecessary distraction as we implement our restructuring plans.”
A spokesperson for the company that controls Debenhams now, Celine UK NewCo 1 Ltd, called the legal action “spurious” and said the firm “will move forward with our debt restructuring process as expected. The CVA provides a platform to deliver a turnaround in the business for which the lending group has committed £200 million of new funding and remains supportive.”
The legal actions were launched just before the standard 28-day challenge period closed on Monday and it's unclear at present what chances they have of success as legal action is a fairly rare path for big names to follow in such cases. It's also not certain exactly what issues Sports Direct and M&G are basing their challenges on.
But it's unsurprising that's Ashley has acted, given the investment of many tens of millions of pounds that was lost when Debenhams plc went under and Ashley's Long campaign to have himself installed as CEO.
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