Debenhams has emergency administration plan in case CVA challenge goes further
today Sep 2, 2019
The legal case came after the company’s CVA earlier this year. The CVA was supported by most of its creditors and means the closure of 50 of its 166 shops, along with rent reductions on others. But Combined Property Control Group, which owns six of its shops, has challenged the CVA in the courts, claiming it was unfairly treated.
If it wins its case, it could mean the rescue plan falling apart and the company having to pay rents at their original level. That means contingency plans have to be in place, despite Debenhams saying it's confident it will win.
The retailer was quoted by The Telegraph saying: “We remain extremely confident this challenge is without merit and expect it to fail. In the meantime, we are progressing with our restructuring, which was approved by the vast majority of creditors, including over 80% of landlords.”
A verdict in the case is expected within the next few weeks.
It follows a bruising period in which major shareholder Sports Direct tried to get its boss Mike Ashley installed as CEO of Debenhams. It failed in this aim and saw a stake in the company that had cost it around £150 million being wiped out after Debenhams plc filed for administration and was taken over by its lenders.
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