Debenhams: the story continued…
5 September 2019 by Andreea Brindas
Debenhams went into pre-packed administration on 9th April 2019 (further details of which can be found within our previous blog available at: https://www.fjg.co.uk/blog/2019/04/16/are-debenhams-stores-closing); followed by entering into a Company Voluntary Arrangement (CVA) in June 2019 (again, further details of which can be found within our previous blog available at https://www.fjg.co.uk/blog/2019/06/13/debenhams-update-restructuring-plans-gone-wrong).
June to September 2019
Our latest blog follows the developments that have taken place since our last post in June 2019. Debenhams previously entered into a CVA with a view to reaching an agreement with its creditors to pay off all or part of its debts and provide a turnaround for the Debenhams business. As part of the process, it announced the closure of 22 stores after Christmas 2019.
Despite the fact that the CVA proposals were approved by the vast majority of the landlords and 90% of all creditors, they were given a 28-day period during which they could appeal the CVA.
Sports Direct (who was Debenhams’ largest shareholder) challenged the CVA in court, with a view to overturning such arrangement, following the decision of Debenhams’ creditors to turnaround the store chain by closing approximately 50 stores and reducing rents to approximately 100 stores.
It is noted that the lenders confirmed the CVA challenges are “spurious, without merit and will vigorously defend them”. Moreover, such challenges are just ‘’unnecessary distraction as the lenders implement their restructuring plans”.
The case is trialled in court this week, expected to end this Friday.
What happens next?
If the appeal of the CVA is successful, Debenhams could fall back into administration. However, it is noted that Debenhams remains confident that the challenge of the CVA ‘is without merit and expect it to fail’.
The judgement is expected to be delivered at a later date and upon receipt of the same it will then be known whether the CVA and the store closures will progress or whether it will be overruled or indeed, whether a further appeal (depending the outcome) will ensue.
The Corporate Commercial Department here at Fisher Jones Greenwood LLP can assist you with a company voluntary arrangement, internal restructures, sale of business, acquisitions and/or any other related services; as well as assist you with the preparation of any documentation required and guide you through the transaction.
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Source: BBC News