Warning: "continue" targeting switch is equivalent to "break". Did you mean to use "continue 2"? in /homepages/19/d739280738/htdocs/UKNewsDesk/wp-includes/pomo/plural-forms.php on line 210
UK News Desk

Debenhams falls into administration after rejecting Mike Ashley’s offer

Debenhams falls into administration with around 50 stores set to close after department chain rejects Mike Ashley’s last-ditch £200m rescue offer

  • Rescue package would have meant that Mike Ashley be made chief executive 
  • Mr Ashley was given a deadline to stop Debenhams going into administration 
  • The company employs around 25,000 staff members across the UK 
  • Unions said the government should step in to help the crumbling High Street
  • The administration process will not affect the retailer’s pension scheme
  • Over the weekend Mr Ashley tore into Debenhams executives, calling on the board to be investigated 

Debenhams has fallen into administration after rejecting a new offer from Sports Direct’s Mike Ashley to pump £200million into the department store. 

Stores are continuing to trade after shares for the struggling retailer were suspended before today’s trading, at its own request, hours after a revised offer by Mr Ashley was turned down because he wanted to be chief executive. 

Its lenders, which are made up of High Street banks and US hedge funds, have now seized control of the company. 

Debenhams – which has 166 stores and employs 25,000 people has been struggling for a number of months, with debts of £640million and three profit warnings issued last year. 

It has also announced plans for around 50 stores to close in the next couple of years, with the outcome of this to be decided by rent costs and negotiations with landlords in respective areas of the country.

Debenhams was tore into over the weekend and the board of the chain was called to be investigated

Debenhams was tore into over the weekend and the board of the chain was called to be investigated

FTI Consulting has been appointed to carry out the process but the firm insisted that stores will continue to trade as normal.

Administrators have sold the group to a newly-incorporated company controlled by Debenhams’ lenders, including hedge funds thought to include Alcentra, Angelo Gordon and Silver Point Capital.

Chairman Terry Duddy said: ‘It is disappointing to reach a conclusion that will result in no value for our equity holders.

‘However, this transaction will allow Debenhams to continue trading as normal; access the funding we need; and proceed with executing our turnaround plans, whilst deleveraging the group’s balance sheet.

‘We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.’

Mr Ashley’s Sports Direct had made a revised £200 million rescue offer for Debenhams, delaying the department store’s administration.

The offer involved underwriting a rights issue which would have seen existing investors buying newly-issued shares and was an advance on an £150 million plan tabled on Monday, which was rejected.

Under the proposal, Debenhams’ lenders would have had to agree to write off £82 million of its £720 million debt mountain, as well as install the tycoon as chief executive.

Under new ownership, Debenhams will have access to £200 million in emergency funding.

Sports Direct called for Debenhams interim chairman Terry Duddy (pictured above) to take a lie detector test

Mike Ashley (pictured above) called for the board of Debenhams to be investigated

Mike Ashley (pictured right) called for Debenhams’ interim chairman Terry Duddy (left) to take a lie detector test

The last-minute rescue package from Sports Direct promised to underwrite a £200 million rights issue, on the condition that Mike Ashley be made chief executive of Debenhams.

Sports Direct had previously said its proposal had been rebuffed and called for the Debenhams board and its lenders to actively engage in negotiations to save the chain.

Mr Ashley has a near 30 per cent stake in the department store but faces wipeout if it presses ahead with a £200 million refinancing plan announced in March. 

Why has Debenhams rejected Mike Ashley’s £200m rescue offer and what does the future hold for the department store? 

Investment specialists told This Is Money that the situation has created a ‘rough ride’ for shareholders’.  

Analysts said a deal was unlikely to happen, based on strained relations between Ashley and Debenhams’ board which have gradually worsened.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: ‘In theory, a deal could be struck, but relations seem far from cordial and the Debenhams management look set on giving the lenders control.’

Russ Mould, investment director at AJ Bell, said: ‘Ashley’s no-nonsense approach to business has likely been a significant factor in the creation of his retail empire. But Debenhams might have been a case where a more softly-softly approach would have yielded greater success.’ 

This is while Simon Reynolds, Strategy Director of branding consultancy, Landor said the demise of Debenhams is not a surprise.

‘It’s a brand that has been neglected for too long, and today’s news is a consequence of this. It’s a case of ‘another one bites the dust’ as the 240 year old business falls into the hands of its lenders and will surely sound warning bells to other struggling retailers.

‘Ultimately, Debenhams failed to establish a clear brand proposition for its customers. It couldn’t demonstrate what made it different to its competitors and it lacked relevance to younger customers.

‘Unless brands want to join Debenhams in the retail scrapyard, they’ll have to learn from the retailer to build a more relevant and differentiated proposition in today’s increasingly challenging environment.’

Others highlighted to cost of rents on the High Street as being a reason for the demise.

Robert Hayton, Head of UK business rates at real estate advisor Altus Group, said: ‘Big rents, high rate liabilities, large staffing needs and leases that were difficult to give up all conspired to create a beast that was unable to adapt in a fast changing retail environment.’ 


The 240-year-old department store chain said an improved £200m offer, which was announced in the early hours of this morning, to underwrite a rights issue was not enough to persuade lenders to give it more time as it seeks new finances. 

Debenhams said in a statement: ‘The board confirms that it received a revised, highly-conditional, proposal from Sports Direct in the early hours of April 9, which indicated a willingness of Sports Direct to underwrite an equity issue of £200 million.

‘The company’s lenders have confirmed to the company that the proposal, on the terms set out, was not sufficient to justify an extension to the 8 April deadline.’ 

The so-called pre-pack administration – where the outcome is agreed before administrators are called in – means investors with shares in Debenhams will be wiped out. 

Its comes as new figures suggest that UK shoppers cut back spending for the first time in almost a year last month.

This is reportedly down to both Brexit worries and seasonal pressures, according to the British Retail Consortium (BRC).  

The BRC said total sales across its members which include mostly major high-street retailers and supermarkets – had dropped by 0.5 per cent year-on-year in March, after a 0.5 per cent rise the month before.

This is the first fall since April 2018. 

Unions have said this is a difficult time for employees of Debehams, who are now faced with uncertainty and highlighted that the government should step in to prevent this trend from continuing across the High Street.

Gary Carter, GMB National Officer, said: ‘It’s very concerning for employees – and the retail sector in general – that Debenhams is on the precipice.

‘This famous high street name has been struggling for some time and it would be awful if it joined the long list of retailers to close its doors in recent months.

‘Debenhams workers have endured uncertainty and will be anxious about their future livelihoods.

‘Further high street store closures have a real and negative impact on local communities.

‘It’s about time the Government did something to stem the tens of thousands of retail job losses and help secure a vibrant high street sector in the future.’ 

This is while retail union Usdaw said it was more devastating news for staff who were already living under the uncertainty of possible store closures since last year. 

‘Once again, we urge the company to engage with Usdaw the trade union for all Debenhams staff. It’s crucial that the staff and their voice should be heard. We will continue to provide our members with the support and advice they need at this very difficult time.’

‘Usdaw’s Save Our Shops campaign wants the Government to take urgent action to address the challenges facing retail. Three million people are employed directly in the retail sector and another 1.5 million jobs rely on the success of shops. In recent years, hundreds and thousands of jobs have been lost in retail, with large and small retailers alike closing their doors. If this was any other industry the Government would be stepping in to take some action.’

Mr Ashley was previously given a deadline of 5pm on Monday to fulfil one of two conditions to prevent Debenhams from falling into the hands of lenders. 

Over the weekend Mr Ashley tore into Debenhams executives, calling on Sunday night for the board of the struggling high street chain to be investigated, two members to undergo lie detector tests, and trading in its shares to be suspended.

As well as accusing Debenhams bosses of ‘a sustained programme of falsehoods and denials’, the sportswear chain founder added that, in a meeting, ‘misrepresentations were made to induce Sports Direct into signing a non-disclosure agreement, locking them out of any ability to trade in the bonds or equity of Debenhams for a period of time’.

In an extraordinary outburst, Mr Ashley claimed he and two colleagues subsequently took lie detector tests, with the results showing ‘without any doubt’ that they were telling the truth in their recollection of the meeting.

Sports Direct called for Debenhams interim chairman Terry Duddy and non-executive director David Adams to take their own lie detector tests to ‘clarify their recollection of this meeting’. 

Under the proposal, £101 million is to be drawn down immediately to allow restructuring, which will include store closures and rent reductions.

The other £99 million would have been made available if Sports Direct – or any other shareholder with a stake of more than 25% – fulfilled one of two conditions by April 8.

One option allowed Mr Ashley to make a takeover offer which included arrangements to refinance the group’s debt.

Alternatively, he had to call off an emergency meeting he requested to install himself on the retailer’s board and commit to either providing funding for the business or underwriting the issue of new shares.

The Newcastle United owner made the now-rejected offer on Friday, saying it would form part of a ‘comprehensive refinancing’ of Debenhams and would be contingent on the retailer’s lenders agreeing to write off £148 million of debt.

Sports Direct is continuing to ‘actively evaluate’ a conventional takeover, priced at 5p per share.

Legal experts have said what’s important now is what happens next with the process.

Tim Carter, partner and insolvency expert at Stevens & Bolton LLP said the new lenders will clearly need to streamline operations to try and achieve costs savings to the company as a name on the High Street by offloading a number of poor performing stores.

‘This is likely best achieved via a company voluntary arrangement (‘CVA’).

‘Of course, a number of retailers have recently utilised CVAs to obtain a reduction in onerous rent obligations imposed by their landlords; essentially, an attempt at survival.

‘However, whist there have been some notable examples of successful CVAs – among them Travelodge, Game, HMV and Dreams – such CVAs have also been subject to challenge, especially where landlords of different sites are treated differently by the CVA; a scenario no doubt to be repeated within any CVA proposed by Debenhams. Its continued presence on the High Street remains far from certain – watch this space.’

Bloodbath on the High Street: How shops in the UK went from bustling to bust 

2018 saw one of the worst years for the UK High Street with retailers shutting their doors and plaguing homes across the country with many job losses.

Crisis hit brands such as House of Fraser and Marks & Spencer fought to keep stores open while other retailers such as New Look pushed for a solution to stop store closures and job losses.

In 2018 nearly 85,000 retail jobs were lost in the UK as businesses continued to go bust as 1,000 retail business went into administration between January and September. 

As well as this the number of retail outlets left empty was up by 4,400 in 2018 according to data from the Local Data Company.

House of Fraser (pictured above) is one of the crisis hit brands on the UK High Street

House of Fraser (pictured above) is one of the crisis hit brands on the UK High Street

Marks & Spencer has been battling with the UK High Street and had previously struck a deal with Ocado to transform grocery shopping

Marks & Spencer has been battling with the UK High Street and had previously struck a deal with Ocado to transform grocery shopping

High Street giant Gap has also announced it will close 230 stores worldwide as its US parent company launches a massive restructuring programme.

The pressure on High Street retailers has hit an all-time high as they continue to try and keep up with the ever growing popularity of online shopping. 

Online retailers are able to keep prices low as they don’t face the massive rental costs of physical stores or the staff rates.

While retailers battle the rise in online shopping they are also being forced to battle Brexit, as many supply chain routes and whether or not they will be available in a no-deal scenario have put added cost worries onto retailers as many consider stock piling their items or not importing them at all. 

GAP (pictured above) also announced it was closing more than 200 stores as part of a worldwide restructuring programme

GAP (pictured above) also announced it was closing more than 200 stores as part of a worldwide restructuring programme

The rise in online shopping with companies such as Amazon has also put a strain on the High Street

The rise in online shopping with companies such as Amazon has also put a strain on the High Street 

Here are some of the big name retailers which have lost out as they face fierce competition from the rise of online shopping


The carpet retailer is closing 92 stores across the UK. These closures represent nearly a quarter of all UK Carpetright stores.

Toys R’ Us

The UK’s largest toy shop went into administration in February 2018, leading to an estimated 2,000 redundancies.

House of Fraser

The department store chain was on the verge of heading into administration but was rescued at the eleventh hour by Sports Direct owner Mike Ashley.


The electronics giant has gone bust, closing shops across the country and putting thousands of jobs at risk.


The baby and toddler chain is closing 60 shops across the UK putting up to 900 jobs at risk.


Poundworld announced it was going into administration on June 11 after talks with potential buyer R Capital broke down, putting 5,100 jobs at risk.


The DIY chain set to close 42 DIY outlets shut, putting around 1,500 jobs at risk.

Marks & Spencer

The retailer announced in May it plans to close 100 stores by 2022, putting hundreds of jobs at risk.

In August stores in Northampton, Falkirk, Kettering, Newmarket, New Mersey Speke, Stockton and Walsall all ceased trading.

Orla Kiely 

Orla Kiely, the Irish fashion retailer collapsed in September and closed all its stores after a slump in profits.


In December HMV entered into administration with its flagship London Oxford Street having closed earlier this year.  

L.K Bennett

Fashion brand L.Bennett announced it was filing for administration on March 1, 2019. Linda Bennett sent employees an email early in the morning to inform them of the news before it hit news outlets.

Pretty Green

In March, Liam Gallagher’s Pretty Green filed a notice of intention to appoint Moorfields Advisory to handle insolvency problems across its UK stores. At the beginning of April JD Sports purchased the company, saving around 70 jobs.



Let’s block ads! (Why?)

News | Mail Online

Leave a Reply

Your email address will not be published. Required fields are marked *

Powered by WP Robot

Scroll Up