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Sports Direct challenges Debenhams CVA

Sports Direct has submitted a legal challenge to Debenhams’ company voluntary arrangement (CVA), which was approved by creditors last month.   

The CVA received a majority “significantly above” the required threshold of 75% on each proposal on 9 May, paving the way for 22 store closures by January 2020.

It followed the pre-pack administration of Debenhams, which placed it into the hands of lenders, and wiped out the value of shareholders’ stakes, including Sports Direct’s near 30% stake. 

Debenhams said it had received applications to challenge its CVA ”from parties including Sports Direct”.

Terry Duddy, Debenhams executive chairman, said: “We believe the challenges to the CVAs to be without merit and will vigorously defend them.

“Given the overwhelming support for the proposals from creditors, including over 80% of landlords, this is an unnecessary distraction as we implement our restructuring plans.”

A spokesperson for Celine UK, the investment consortium that now owns Debenhams, added: “We note the spurious challenges to Debenhams’ CVA proposals, which were approved by the vast majority of landlords and more than 90% of all creditors. We will move forward with our debt restructuring process as expected.

“The CVA provides a platform to deliver a turnaround in the business for which the lending group has committed £200m of new funding and remains supportive.”

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