By Sammie Jones
Mike Ashley’s Sports Direct is funding a legal challenge against Debenhams because it wants to drive it out of business and “pick up its assets on the cheap”, it was claimed in the High Court on Monday.
Sports Direct, founded by billionaire Mr Ashley, has been accused of financing a High Court lawsuit brought by six landlords challenging restructr
The landlords are asking the High Court to overturn the decision by Debenhams’ creditors to approve a company voluntary arrangement — a form of insolvency that allows companies to force losses on creditors. The CVA allowed Debenhams to close 22 stores and reduce rents on 100 more.
However, the landlords who are part of the Combined Property Control Group, claim the decision was unfair and say they have been treated less favourably than other unsecured creditors.
CPC Group has said the company needs to enter administration by September 29 or the unsecured creditors — the landlords, local authorities and suppliers — will potentially lose £228.8m that could otherwise be clawed back.
Debenhams is fighting the case in a High Court trial which began on Monday. The retailer alleged in its written arguments to the trial that Sports Direct was funding the legal costs of the lawsuit because it wanted to “drive Debenhams into administration so that it can pick up its assets on the cheap”.
Tom Smith QC, representing Debenhams, claimed in the written submissions that Sports Direct, which owns rival department store chain House of Fraser, “wants to drive its principal competitor out of business”.
He claimed that Sports Direct was now using the landlords “as vehicles to advance its own commercial interests” and “given the personalities involved, it is also possible that Sports Direct’s conduct may be borne of a desire to ‘punish’ the company and its lenders for rejecting Sports Direct’s proposals”.
t these proceedings will be of significant interest to the legal and business community.”