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Sports fashion retailer Sports Direct is reportedly seeking to “eliminate Debenhams as a competitor” by funding a lawsuit which would push it back into administration, the High Court heard on Monday.
At the court hearing, Debenham’s lawyer, Tom Smith QC, said the retailer believed Sports Direct was “backing the case because it wants to drive its principal competitor out of business”.
According to The Guardian, Smith said that Sports Direct “seemed to want to drive Debenhams into administration so that it can pick up its assets on the cheap”, and added that this “would be consistent with Sports Direct’s recent modus operandi”.
In June it was confirmed that Sports Direct was among parties which sent applications to challenge its CVA, which was voted through by creditors on 9 May.
Debenhams went under the control of its lenders when it entered a pre-pack administration in April. Debenhams Group Holdings Limited, its subsidiaries and certain dormant companies, which together make up the Debenhams Group, were transferred to the ownership of Celine UK NewCo 1 Ltd.
The administration followed Debenhams’ rejection of Sports Direct’s offer to underwrite £150m equity issuance. It also meant Sports Direct would have its 30% stake in the department store wiped out leading Sports Direct owner Mike Ashley to criticise the department store’s advisors, saying they should be “put in prison”.
Sports Direct has been contacted for comment.
