Mike Ashley’s Frasers Group has applied to the High Court to cast aside a settlement agreed with Debenhams’ administrators earlier this year – a report in The Sunday Times claims.
The move was designed to “kickstart investigations into the collapsed department store group’s directors and advisors,” the paper said.
Under the settlement agreed with Debenhams’ administrators at FRP Advisory, Ashley was not to pursue legal action.
He had agreed to it as part of a purchase deal for the fixtures and fittings in Debenhams’ empty stores – “a ploy to gain leverage over landlords on stores he wishes to take for his Frasers Group empire,” The Sunday Times said.
In January, FRP sold the Debenhams brand and website to Boohoo for £55m – resulting in 118 stores closures and around 12,000 job losses.
According to the paper, “Ashley’s anger relates to the first time Debenhams filed for administration in 2019 – when his near 30% holding was wiped out.”
A consortium of lenders, led by American hedge fund Silver Point Capital, took control of the business through a pre-pack administration.
“The lenders appointed FTI Consulting as administrators to Debenhams shortly after they had given them advice that Ashley claims enabled them to seize control of the business.
“The pre-pack cost Ashley an estimated £150m. At the time, FTI Consulting said the sale of the business was in the best interests of its creditors and that its actions were not subject to conflicts of interest.”
After a court application by Ashley, Debenhams was wound up by judge Daniel Schaffer in the Insolvency and Companies Court in January.
The winding up order was made after the news that Boohoo had bought the brand and website emerged.
Describing Debenhams as a “rudderless ship” drifting in an “ocean of insolvency,” Schaffer ruled that the circumstances of Debenhams’ collapse in 2019 should be investigated by the official receiver because there may have been assets available for distribution to shareholders.
It is understood that the agreement Ashley signed this year with FRP Advisory effectively blocks that from happening.