M&G Real Estate drops legal action against Debenhams
By Abigail Townsend
Date: Monday 08 Jul 2019
(Sharecast News) - M&G Real Estate has withdrawn its legal challenge to Debenhams\' restructuring plans, it was announced on Monday.
A syndicate of banks and hedge funds took control of Debenhams earlier this year, and are seeking to restructure the department store group through two Company Voluntary Agreements. The CVAs have allowed the ailing chain to keep trading but have wiped out investors\' holdings.
Creditors and landlords approved the CVAs, by a majority of 97% and 94% respectively, in May. But shortly afterwards, property investor and landlord M&G Real Estate, part of insurance giant Prudential, took the usual step of challenging the CVA through the courts. At the time, it said the action was \"in the interest of our investors\" but did not expand further.
Another legal challenge was launched at the same time by Sports Direct, the retail business controlled by Mike Ashley, and Combined Property Control, which owns six Debenhams stores. That challenge remains outstanding, but Debenhams said on Monday that M&G had dropped its legal action.
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pleased that M&G has recognised the necessity for the CVAs and that as a result of the discussions we have had, it has withdrawn its challenge.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 wants to close at least 22 of its 166 British stores and force through rent cuts.
Ashley, who spent £150m building up a shareholding in Debenhams, fought to take control of the retailer but lost out to the syndicate.
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