// M&G Real Estate withdraws legal challenge against Debenhams over its CVA
// Challenge from Sports Direct remains outstanding, which Debenhams believes should be dismissed
// Debenhams’ CVA proposals were approved by more than 90% of creditors back in May
One of the legal challenges brought against Debenhams regarding the department store’s CVA has been withdrawn after negotiations between the two parties concerned.
In a statement, Debenhams confirmed that following “positive, constructive discussions” with M&G Real Estate, both parties have “resolved their concerns” and agreed to withdraw the court action related to Debenhams’ CVA.
In May, Debenhams’ CVA proposals received the support of the vast majority of its creditors – with 97 per cent and 94 per cent of them respectively voting in favour of the two proposals.
Creditors include landlords, banks and pension funds.
Debenhams highlighted that more than 80 per cent of landlords voted in favour of each CVA proposal.
The retailer welcomed M&G Real Estate’s decision to withdraw its legal challenge.
“The CVAs are a vital step for Debenhams as it restructures to adapt to the changing retail environment, and will provide a platform for the sustainable future growth of the business,” the department store said in a statement.
“The CVAs will benefit all Debenhams’ stakeholders, including landlords, and this is a vital step in preserving as many as possible of the jobs of the 25,000 people who work for Debenhams.”
However, a challenge to the CVAs from Sports Direct and Combined Property Control (CPC) remains outstanding.
Debenhams said this was “completely without merit and should be dismissed”.
Debenhams chairman Terry Duddy said: “I am pleased that M&G has recognised the necessity for the CVAs and that as a result of the discussions we have had, it has withdrawn its challenge.
“I call on Sports Direct and CPC to do the same. If they do not, we will seek to have it thrown out.
“In the meantime, we continue to make good progress with the company’s restructuring plans.”
Debenhams’ CVA will see it initially close 22 stores by January 2020, with the total growing to 50 afterwards, while 30 will be downsized and rent reductions sought on more than 100 stores.
This places 1200 jobs at risk.
Debenhams has 165 stores in the UK.