Yahoo Finance Mike Ashley defeated in bid to prevent Debenhams’ rent-cut rescue
A bid by Mike Ashley to block Debenhams from claiming insolvency failed on Thursday, the latest blow to the Sports Direct retail king.
Ashley had funded a legal challenge to Debenhams’ move to enact a company voluntary agreement (CVA) that would allow it to close 22 stores and cut rents on another 100.
That deal was approved by creditors, including most landlords, protecting thousands of jobs.
Ashley, who had already lost £150 million buying shares in Debenhams, was accused of trying to disrupt the CVA simply for his own benefit.
He owns rival department store House of Fraser, which would see a rise in sales if Debenhams disappeared from the High Street.
Today the High Court threw out the legal challenge, leaving Ashley with expensive bills. Sports Direct wasn’t entitled to challenge the CVA since it is not a creditor, but Ashley funded a court action by property investor Aubrey Weis, which owns six Debenhams properties.
Debenhams chief executive Stefaan Vansteenkiste, 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 Christmas period.” Ashley had tried, and failed, to buy Debenhams before the CVA.
The judge ruled: “The advantage to Mr Ashley is said to be that it enables him to pursue his grievance at the manner in which his attempt to acquire Debenhams pre-administration was frustrated. On the material before me that analysis is entirely plausible.”
Ashley is one of Britain’s most successful entrepreneurs with a 60% stake in Sports Direct and a fortune of around £2 billion. He has come under fire for a “scattergun” approach to acquisitions that has lately seen him snap up Jack Wills. It already owned Evans Cycles and has stakes in numerous retailers.
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By one analysis, Ashley has lost more than £500 million on his investments in the High Street. Last week Ashley said plans to elevate Sports Direct into a Selfridges-type brand were on track. He is rolling out luxury fashion label brand Flannels. But it is still without an auditor after Grant Thornton quit.
Ashley wants one of the big four — PwC, Deloitte, KPMG and EY — on board. If it does not name one of the four Business Secretary Andrea Leadsom may step in and appoint one.
Sports Direct could not be reached for comment. Its shares fell 2%, or 6p to 276.80p.
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