Debenhams says a company voluntary arrangement (CVA) challenge process, which began last year, has now come to an end and the retailer can proceed with its debt restructuring and continue its recovery.
The UK department store retailer Debenhams received a challenge to its CVA plans from parties including Sports Direct in June last year. Sports Direct was one of the largest shareholders in the company, and its stake was wiped out when lenders took control of the department store chain under a pre-pack administration early in 2019.
The legal challenge was rejected by the High Court in September, but another challenge was reportedly brought by the Combined Property Control Group (CPC), which owns six properties let by Debenhams. It had alleged it was being treated unfairly as a creditor for the department store chain, according to Retail Gazette.
In a statement today (11 March), Debenhams said all relevant procedural matters dealt with at the challenge hearing in February, have been concluded in its favour and that the time period for any appeal to be lodged has now expired.
The outcome will allow Debenham’s shareholders to proceed with the final phase of its debt restructuring, which is expected to take the form of a Scheme of Arrangement resulting in the conversion of at least GBP100m (US$129.5m) of debt to equity. This will reduce the group’s indebtedness and provide “a robust platform” for Debenhams’ continuing recovery.
“This is great news for Debenhams,” says Stefaan Vansteenkiste, CEO of Debenhams. “We can put the distraction of this litigation behind us and proceed with our plans to turn the business around. With committed investors, a strengthened board and a restructured balance sheet we have the platform from which to rebuild a sustainable business.”
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By GlobalDataReports are circulating of Vansteenkiste’s exit from the business. The turnaround expert joined the group as chief restructuring officer last April and was then appointed as CEO by Debenhams’ new owners, on an interim basis in August, to replace departing CEO Sergio Bucher.
Debenhams is now owned by Celine Jersey Topco Limited, a consortium of investors and lenders that took control in early 2019 when its holding company fell into administration.
