Board accused of ‘dereliction of duty’ for turning down interest-free offer
Sports Direct, which dramatically ousted the chairman of Debenhams on Thursday, has accused the department store’s directors of “dereliction of duty” for turning down a £40m interest-free loan offered by the sports chain before Christmas.
In a letter to the chair of the housing, communities and local government select committee of MPs, published on Friday, Sports Direct said: “If Debenhams does fail, the responsibility for that will rest solely with the Debenhams board.”
It said its offer of a £40m interest-free loan before Christmas had been made in “good faith and the board may want to reconsider … whether turning down our latest offer of assistance was a dereliction of duty”.
Debenhams, which has net debts of £286m, is in talks with its bankers about refinancing before its current loan facilities expire next year. The group urgently needs to find a new way to raise cash after halting the planned sale of its Danish Magasin du Nord chain when it failed to receive strong enough offers.
Debenhams said it had not ruled out any options, including an insolvency process that could speed up a plan to close up to 50 of its 165 UK stores over the next five years.
However, the company turned down the £40m loan from Sports Direct because it came with a demand for security over some Debenhams’ assets that would have given Ashley’s company a preferential position over other shareholders.