Mike Ashley makes legal threat as Debenhams deadline beckons
Sports direct owner Mike Ashley has suggested he could take legal action against directors at Debenhams as the deadline for him to make a formal bid for the struggling department store chain approaches.
Ashley has until April 8 to make that bid but as the chance of his participation in a rescue deal decreases, he has suggested the retailer's directors have not acted in the best interest of the firm under the UK Companies Act, according to the Financial Times.
Read more: Sports Direct calls on Debenhams investors to protest against finance deal
In a letter to the Debenhams board, Sports Direct say “the directors have not acted in the best interests of the company or to promote its success”, the FT reported.
It asked the board to provide minutes of meetings that discussed financial proposals including Sports Direct’s own offers in a bid to determine whether there is legal standing to take action against the directors.
The letter reportedly said it would “allow Sports Direct proper opportunity to assess . . . whether there are good grounds for bringing a derivative claim against some or all of the members (or former members) of the board, and on what grounds.”
Hostility between the two has grown in recent months, with Debenhams looking to push through rescue refinancing that its largest shareholder, Sports Direct, opposes.
Ashley has previously threatened legal action against those on the board but is yet to take any.
He has until Monday to make a formal bid after Debenhams told the Sports Direct founder to provide a takeover offer or confirm it will underwrite a rights issue.
Sports Direct has complained about insufficient time and financial information being provided for them to consider the proposal.
Read more: Moody's downgrades Debenhams as outlooks stays negative
Either option could result in Sports Direct taking on the responsibility of refinancing more than £500m worth of debt.
Debenhams has so far declined to comment but previously said that it would not provide Sports Direct with financial information “if it is framed in the context of contemplated litigation”.