Debenhams has won a legal challenge against its Company Voluntary Arrangement (CVA). The department store was taken to court by Combined Property Control Group (CPC) – the landlord of six Debenhams stores in England – over the argument that its CVA was “designed to create a situation in which the company’s general body of unsecured creditors is paid in full at the expense of certain landlords and local authorities.”

CPC’s legal challenge was financially supported by Mike Ashley’s Sports Direct, which dropped its own legal challenge against Debenhams in July. However, High Court judge Justice Norris rejected CPC’s challenge on four of the five grounds addressed. The remaining ground was addressed by the deletion of a technical provision of the CVA relating to landlord forfeiture.

While it can be appealed, Norris’ ruling gives Debenhams the final green light to push ahead with its CVA.

The department store said stores will operate as usual until Christmas, but by January 2020 it will shut down 22 stores and rent reductions or lease negotiations on a further 105 stores will have been sought.

After the initial batch of store closures, the department store will eventually close down a total of 50 of its 166 stores. Thousands of jobs are estimated to be cut as a result of the CVA process.

Sports Direct – which was once Debenhams’ biggest shareholder with a near-30 per cent stake – had initially submitted a legal challenge in June, but this was withdrawn the following month in favour of funding CPC’s lawsuit.

A third legal challenge, brought forward by M&G Real Estate, was also withdrawn in July after negotiations between the property firm and Debenhams resolved concerns between the two parties.

Debenhams chief executive Stefaan Vansteenkiste said “We are delighted that the court has today confirmed that our CVA is effective and will continue to be implemented as planned. We note that the only aspect that the judge required to be adjusted was a technical provision of the CVA relating to landlord forfeiture provisions.

“Our proposals had unprecedented levels of support from our landlords and today’s outcome is good news for our 25,000 employees, our pensioners and suppliers. We retain the support of our lenders, and everyone at Debenhams can continue to focus on trading ahead of the important Christmas period.”