Debenhams’ lenders took dominate of the ailing British retailer on Tuesday after it went into administration, wiping out shareholders including billionaire Mike Ashley in the past due corporate failure on the high street.
Once the biggest department store chain in the country, Debenhams has been hand-to-hand encountering with a sharp slowdown in sales, high rents and ballooning debt, plus an acrimonious battle with its largest shareholder, Ashley’s Plays Direct.
While its stores will keep trading, the appointment of administrators marks the latest corporate failure in the British retail sector after Ancestry of Fraser, electronics firm Maplin and cycle shop Evans all struggled to stay afloat.
Administrators from FTI Consulting the moment that sold Debenhams’ holding company to a new entity owned by its lenders. Contracts with stores, staff and suppliers were maintained by its operating companies and will not be affected, it said.
The announcement marks defeat for the retail billionaire Ashley, who has spent months combating to wrest control of the business, offering a rescue plan that came with the condition he was appointed the chief numero uno.
“It is disappointing to reach a conclusion that will result in no value for our equity holders,” Chairman Terry Duddy believed.
“However, this transaction will allow Debenhams to continue trading as normal; access the funding we need; and proceed with executing our turnaround schemes, whilst deleveraging the group’s balance sheet.”
Despite its long history, Debenhams has been battling for survival after a consumer move online and to cheaper outlets destroyed 90 percent of its share value in the past year.
It currently has debt alacrities worth 720 million pounds and a market valuation of 22 million pounds.