Wed, 4th Sep 2019
Struggling high street retailer successfully managed to save a large number of its stores earlier this year via a CVA. The retailer is once again facing administration, however, as the CVA is now being challenged in court.
Combined Property Control is the landlord of several of the sites that Debenhams runs stores out of, and the company is fighting against the agreement saying that it was not properly managed. A court hearing began earlier this week, and the hearing is expected to run until Friday, although a hearing is not expected until much later.
Debenhams believes that it has a good chance of winning the case, since the CVA had the backing of 90 percent of its creditors. However, the landlords who are leading the challenge note that the majority of the landlords that voted were ones that would be unaffected by the arrangement. There are landlords who are now challenging the arrangement who hold property in trust for charities and note that they need to get the best rates possible for their clients.
Debenhams has reportedly hired Deloitte to draw up a plan for them in the event that the legal challenge is successful. The challenge is being backed by Sports Direct, who are funding the landlords that are struggling to afford legal costs. It is thought that Sports Direct hopes to see Debenhams fall into administration so that they can pick up the assets held by the company cheaply, eliminating them as a high street competitor.