The move has wiped out shareholders including Mike Ashley, and put thousands of jobs at risk.
As reported by the Guardian, Debenhams has been taken over by its lenders.
The Sports Direct founder Mike Ashley, who has spent at least £150m on building up a near 30% stake in the retailer, has now lost his stake, along with all other shareholders, after the company and its lenders rejected a last-ditch offer of a new £200m cash injection. The offer was dependent upon Mike becoming chief executive, something the company was not willing to entertain.
The offer made in the early hours of Tuesday morning came after an offer of £150m made on Monday was also rejected for the same reason.
In a statement on Tuesday, Sports Direct said it continued to “actively evaluate all possible options to support Debenhams”, including a £61m bid for the company. Debenhams suspended trading in its shares soon afterwards. The department store group said its 165 outlets would continue to trade under a pre-pack deal which only affects its listed holding company.
Debenhams’ operating companies have been sold to the group’s lenders in return for reducing its £620m debt pile and injecting nearly £100m of new funds to keep the group afloat.
The group’s lenders want to close up to 50 stores via an insolvency process known as a company voluntary arrangement. Details of the plan, which landlords must approve, are expected to be announced within a matter of weeks.
Debenhams’ chairman Terry Duddy commented: “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.”
Trustees for the pension scheme have pointed out that it is the PLC which has gone into administration, not the retail business itself, stating: “Members can therefore be reassured that the schemes are carrying on as usual.” This at least offers some relief for current and former staff.