Debenhams calls for Mike Ashley to halt CVA challenge as M&G drops action
Debenhams has called for Mike Ashley to drop a challenge to its store closures and rent reductions, after property firm M&G withdrew from a similar action.
The high street retailer announced on Monday that it had undertaken “constructive discussions” with M&G and that both parties had “resolved their concerns” surrounding a company voluntary arrangement (CVA). They have agreed to withdraw the court action which related to the proposals.
However, a challenge from Ashley’s Sports Direct – which formerly owned almost 30% of Debenhams – and Combined Property Control (CPC) remains outstanding.
Debenhams chairman Terry Duddy said: “I am pleased that M&G has recognised the necessity for the CVAs and that as a result of the discussions we have had, it has withdrawn its challenge.
“I call on Sports Direct and CPC to do the same. If they do not, we will seek to have it thrown out. In the meantime, we continue to make good progress with the company’s restructuring plans.”
The proposals, which were approved by the majority of creditors in May, involve 50 store closures as well as lower rents on more than 100 outlets.
Ashley failed in his attempts to take control of the department store prior to its collapse and subsequent sale in April. The tracksuit tycoon condemned the pre-pack administration of the retailer, which saw it fall into the hands of its lenders, as a “national scandal”.
More than 80% of landlords voted in favour of the CVA, but some landlords have become frustrated with the procedure following its use by a number of high street brands to slim their estates.
The vote on Topshop owner Arcadia’s CVA proposals was postponed last month due to insufficient support from landlords. It was later passed after landlords were offered concessions in the form of smaller rent cuts.
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