Ashley out as lenders take over at Debenhams
DEBENHAMS' lenders took control of the business yesterday, wiping out shareholders including SportsDirect owner Mike Ashley.
One of the biggest department store chains in the UK, Debenhams entered the Irish market in 2006 when it bought the former Roches Stores business here for just under €30m including shops in Dublin, Cork, Limerick, Tralee, Galway and Waterford.
Lenders took control of the group's parent company yesterday, wiping out shareholders including billionaire Mike Ashley, whose alternative rescue offer at been rejected.
Debenhams stores will keep trading the administrators said, but they'll push ahead with a plan to close about 50 underperforming stores and demand rent cuts, moves it said were "critical" to its survival. The plan puts about 4,000 jobs at risk.
Using a corporate insolvency technique called a pre-pack administration, Debenhams appointed FTI Consulting as administrators. They immediately sold the group to its lender, which in turn provided a £99m (€114.4m) rescue loan.
Mr Ashley held his stake in the retailer through Sports Direct, which described Debenhams' pre-pack administration as a "national scandal" and is pushing for the deal to be reversed.
While Debenhams will continue to trade, the insolvency is another blow to a UK retail sector reeling from the collapse of BHS, Maplin, and House of Fraser. Traditional retail in the UK is being hammered by a shift to online by consumers, including online-only outlets like Asos, while established brands are burdened by high rents and debt.
In Debenhams' case that was complicated by an acrimonious battle for control with its own largest shareholder, Mr Ashley's Sports Direct.
The Newcastle United owner who has bought up other struggling chains - including House of Fraser - had spent tens of millions of pounds building up a 30pc stake in Debenhams. The retailer's Irish arm emerged from an examinership in 2016, which allowed it to slash debt and avoid liquidation.