SPORTS Direct tycoon Mike Ashley has threatened legal action to remove the new bosses of Debenhams after the retail giant fell into administration yesterday.
A letter on behalf of Sports Direct’s lawyers calls for the pre-pack administration process to be reversed by 4pm today.
Alamy Live News Sports Direct’s Mike Ashley has called for the new bosses of Debenhams to quit
A “pre-pack administration” is an insolvency process for a business to sell its assets before appointing administrations.
The retailer, which employs around 25,000 staff, fell into the hands of lenders, FTI Consulting LLP, yesterday.
It came after the department store turned down Mr Ashley’s second offer because it would make him chief executive.
It would have seen Debenham’s lenders agree to write off £82million of its £720million debts, which the retailer said was “not sufficient”.
Now, Mr Ashley wants to reverse the appointment of the administrators to continue the battle for control of the struggling chain.
Mike Ashley is threatening legal action to remove FTI as the administrator of Debenhams. This letter from @RPCLaw (representing Sports Direct) accuses FTI of being “conflicted” and gives them until 16:00 today to reverse the Pre-Pack administration. pic.twitter.com/kOHeXP6IzM— Joel Hills (@ITVJoel) April 10, 2019
Sports Direct has called for the administration to be reversed, calling it a “national scandal”.A letter from Mr Ashley’s lawyers, RPC, reads: “SDI (Sports Direct International) will do everything available to it to unwind the damage caused to the Company and other stakeholders…. by the events of today including but not limited to challenging the appointment and all consequences of it.”
It also claims Debenhams’ lenders, FTI Consulting, has a “conflict of interest” because it was “heavily involved” in the “failure by the company, its lenders and advisors to seriously engage” with Sports Direct.
The letter threatens “further action” if Debenhams’ administrators don’t agree to the demands.
The department store had already rejected a similar offer of £150million from the Sports Direct billionaire before Mr Ashley’s second offer yesterday.
Mr Ashley, who holds a 30 per cent stake in the business, has seen his £150million investment in the business wiped out.
PA:Press Association/PA Images Sports Direct tycoon Mike Ashley wants Debenhams’ administrators to quit
In the meantime, all 166 Debenhams stores will continue to trade, although 50 branches have already been ear-marked for closure.
It has not released a list of stores which will shut down.
We reveal more about the process in our guide to what has happened to Debenhams.
Customers are still able to spend their gift cards as stores will continue to trade as normal.
But shoppers have been urged to spend them sooner rather than later.
As part of the pre-pack administration deal Debenhams bosses will renegotiate rents with landlords to help tackle funding problems.
Debenhams asked city watchdog the Financial Conduct Authority to temporarily suspend its shares yesterday.
Debenhams’ chairman Terry Duddy said: “Our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing.”
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The Sun has contacted Sports Direct for comment.
Last year, the Sports Direct boss ploughed £90million into House of Fraser, pulling it out from the brink of collapse.
At the time of purchase, he vowed to save 80 per cent of the chain’s department stores, but since then shoppers have accused the retailer of morphing into Sports Direct.
Debenhams falls into administration with 50 stores to close as part of deal to save the chain
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