Sports Direct CEO Mike Ashley is calling for the resignation of FTI Consulting, the administrators for Debenhams, after his stake in the department store chain was wiped out.
Debenhams entered administration on Tuesday, wiping out the equity of all its shareholders, including Sports Direct.
In a letter to FTI, Sports Direct’s lawyers have threatened legal action to remove the advisory firm as administrators because of a conflict of interests, the Guardian reports.
Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting have been appointed as joint administrators of Debenhams plc.
The letter, seen by The Guardian, said: “ [Sports Direct] will do everything available to it to unwind the damage caused to the company and other stakeholders (including large and small shareholders) by the events of today including but not limited to challenging the appointment [of FTI as administrators] and all consequences of it.”
It claims that FTI had been involved with Debenhams since at least 8 February and had engaged with the group’s lenders, and says the conflict of interest arises because FTI sold the retailer’s operating companies to the same lenders via a pre-pack administration.
After Debenhams entered administration the operating companies were immediately sold to a new company owned by its lenders and are continuing to trade as normal, including the chain’s 166 stores.
Under its new ownership, Debenhams will have available to it “significant additional funding” in line with the £200m cash injection announced on 29 March 2019.
Debenhams’ lenders paid £101.8m for the group and took on £520m of debts and its pension obligations, taking the total cost to £621.81m.