Sports Direct challenges Debenhams CVA

Department store Debenhams has confirmed Sports Direct is among the parties which have 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”.

In a statement released to the London Stock Exchange on 11 June, 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 Celine UK NewCo 1 Ltd, added: “We note the spurious challenges to Debenhams’ CVA proposals, which were approved by the vast majority of landlords and more than 90% of all creditors. We 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 £200m of new funding and remains supportive.”