LONDON, United Kingdom — British department store group Debenhams said on Thursday that its company voluntary arrangement (CVA) will go ahead as planned after a court rejected challenges to the rescue plan.
Once the country's biggest department store chain, Debenhams has been hit by a sharp slowdown in sales, high rents and ballooning debt, plus a power struggle with former shareholder Mike Ashley's Sports Direct.
Debenhams' lenders took control of the retailer in April in an effort to keep stores open. The retailer is restructuring using a CVA, which allows retailers to avoid insolvency by offloading unwanted stores, securing lower rents on other stores and reaching a compromise with creditors.
Debenhams said on Thursday, the challenge to its CVA was rejected on four of the five grounds, and the remaining has been addressed by the deletion of a technical provision relating to landlord forfeiture.
"Our proposals had unprecedented levels of support from our landlords and today's outcome is good news for our 25,000 employees, our pensioners and suppliers," Chief Executive Stefaan Vansteenkiste said in an email.
"We retain the support of our lenders, and everyone at Debenhams can continue to focus on trading ahead of the important Christmas period," he said.
The CVA was earlier challenged by Sports Direct and M&G Real Estate.
By Noor Zainab Hussain; editor: Shailesh Kuber.