As landlords M&G withdraw challenge to Debenhams' Company Voluntary Arrangements (CVAs), the ailing department store business has called on Sports Direct and House of Fraser boss Mike Ashley to do the same.
A statement issued by Debenhams confirmed that, “following positive, constructive discussions,”, both M&G Real Estate and Debenhams Group have resolved their concerns and agreed to withdraw the Court action related to Debenhams' CVAs.
However, a challenge to the CVAs from Sports Direct and Combined Property Control remains outstanding. Mr Ashley launched his legal challenge last month after Debenhams creditors approved a CVA to restructure the business.
It is part of an ongoing wrangle with the department store group, which was taken over by its lenders in a pre-packed administration in April, effectively wiping out Mr Ashley’s stake of around 30% in the company. When the administration was announced, Mr Ashley said of the deal: “This is nothing short of a national scandal - and one that could so easily have been avoided if Debenhams had chosen to engage with its largest shareholders constructively rather than obstructively.”
Debenham’s new owners’ say the legal challenges are “spurious”, “completely without merit and should be dismissed”.
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pleased that M&G has recognised the necessity for the CVAs and that as a result of the discussions we have had, it has withdrawn its challenge.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."
Debenhams described the CVAs as “a vital step” for the business, as it restructures to adapt to the changing retail environment, adding that it “will provide a platform for the sustainable future growth of the business”.
The company also claims the CVAs will benefit all Debenhams' stakeholders, including landlords, which it states is key “in preserving as many as possible of the jobs of the 25,000 people who work for Debenhams.”
Under the restructure, Debenhams plans to close at least 22 of its stores in 2020 and force through rent cuts and changes to lease terms on many others. This follows the closure of 50 stores, as previously announced by management in October 2018; reducing the retailer’s portfolio from 166 to 94 by the end of next year.
Stores expected to close in 2020 are: Altrincham, Ashford, Birmingham Fort, Canterbury, Chatham, Eastbourne, Folkestone, Great Yarmouth, Guildford, Kirkcaldy, Orpington, Slough, Southport, Southsea, Staines, Stockton, Walton, Wandsworth, Welwyn Garden City, Wimbledon, Witney, Wolverhampton.