UK department store retailer Debenhams has confirmed it has received a challenge to its company voluntary arrangement (CVA) plans from parties including Sports Direct.
The retailer announced the details of two proposed CVAs in April, one relating to Debenhams Retail Limited, the main trading entity, and one relating to Debenhams Properties Limited. The CVA proposals provide a mechanism to restructure its store estate – including plans to close 22 stores in 2020 – and were approved by Debenhams’ creditors last month.
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Now, the department store retailer says it has received applications to challenge its CVAs from parties including Sports Direct International Plc. Sports Direct was one of the largest shareholders in the company, and its stake was wiped out when lenders take control of the company under a pre-pack administration earlier this year.
“We believe the challenges to the CVAs to be without merit and will vigorously defend them,” says Debenhams’ executive chairman Terry Duddy. “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.”
The retailer’s new owner, Celine UK NewCo 1 Ltd, adds: “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 GBP200m of new funding and remains supportive.”
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By GlobalData
