Debenhams racked up a legal bill of more than £2m defending its CVA in the High Court last year, according to court documents.
Debenhams won the challenge to its CVA in September last year, after Combined Property Control Group – the landlords of six Debenhams stores – took legal action, with backing from Mike Ashley’s Sports Direct.
Although in the UK the loser in litigation is liable for the winner’s legal bill, the total costs are often assessed at a later date by the judge in the case, or a specialist costs judge.
In a ruling about costs handed down today (5 June) by the judge in the September case, Sir Alastair Norris, it emerged that Debenhams is claiming £2.296m to cover its legal bills up to February this year.
“The overall level of costs is very high,” the judge said in the ruling, “but in part that is a consequence of the applicant landlords obtaining an order for an expedited hearing during the vacation (which necessitated Debenhams having to change counsel and to work to tight deadlines over a holiday period).”
He said that, while that figure is likely to be challenged by the other side, some of the money should be paid now. “Debenhams is in financial distress: that is why the Debenhams CVA was promoted,” he said.
“In my judgment it is not just that Debenhams should wait until the conclusion of the assessment process to receive any of the costs of defending the CVA.”
He said he would take a “cautious approach” because Debenhams “might not be able to return any overpayment”, and ordered the landlords to pay 60% of the amount – or £1,377,877 – within two weeks.
The remaining costs will be worked out at a later date.
