Debenhams is in big trouble and on the verge of insolvency.
In the past month an almighty and increasingly bitter substance has emerged about what should be done with it.
A dusty difference between Mike Ashley – whose retail group, Sports Direct, is Debenhams' largest shareholder – and the company's lenders – including Silver Point Capital, a US hedge fund.
On Friday evening, Ashley offered to sign an attempt to raise £ 150 million from Debenhams shareholders in the form of a rights issue, provided the director was installed.
The board of Debenhams discussed the weekend with lenders to accept the proposal.
Ultimately, finding a common basis between the two parties proved impossible because the trust had completely disappeared.
Over the past few weeks, Mike Ashley has repeatedly tried to dislodge Debenhams' plate.
He publicly accused the company directors of being "incompetence" and "deceptive" and suggested that they get together with lenders to destroy shareholder value.
Sports Direct made a statement on Sunday evening in which he accused the board of Debenhams and his advisers of a & # 39; sustainable program of lies & # 39 ;. The statement called for the company's stock to be suspended and for two board members – Terry Duddy and David Adams – to do lie detector tests.
On Monday afternoon, the board formally rejected Ashley & # 39; s offer.
It looks like game-over. For Mike Ashley, at least.
It is now expected that Debenhams will be brought into a form of prepackaged management. The company looks forward to filing a petition with the High Court as soon as Tuesday morning.
The management plan has been drawn up by FTI and structured in such a way that it influences Debenhams PLC but not the trading company. In other words, the administration is designed to completely wipe out Mike Ashley and the other shareholders, while keeping the company intact.
According to the plan, Debenhams would be withdrawn from the stock market and immediately reborn as a private company owned by its lenders who agreed to exchange an undefined amount of £ 560m of debt they owe for shares.
For the time being, the 165 department stores of Debenhams would normally be traded. Employees, suppliers, pensioners would not be affected.
But change is coming. The Board of Debenhams has previously indicated that the willingness of lenders to agree to this restructuring depends on – among other things – "a significant overall reduction in the group's rent burden".
The Debenhams management team – which will be kept post-administrative – is preparing a Company Voluntary Arrangement (CVA), whereby the closure of up to 50 department stores will take place.
Debenhams cannot survive in its current form. In the future, the company will have fewer stores, have fewer debts and be in private hands.
Debenhams' adventure by Mike Ashley seems to end in failure. Last summer Sports Direct recorded the value of its 30% stake in the company with £ 85 million, now it becomes worthless.