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JPMorgan has taken Sports Direct to the High Court over a £5.4mn bill it alleges the retailer owes for leaving a vast UK site in a state of disrepair.
The sportswear chain, which was ultimately a tenant of the bank, vacated the complex in Wigan, north west England, in 2019, taking advantage of a break clause in the 10-year lease it first signed in 2014.
Sports Direct, owned by Mike Ashley’s Frasers, has been accused of not carrying out most of the refurbishment work that it was contractually required to do before it departed, breaching some covenants and causing “loss and damage”, according to court documents filed by the bank this month.
Lawyers for JPMorgan Europe said in the documents that Sports Direct had more than six months to make good “any alterations, cover up or changes it made without the landlord’s consent” — work that the bank subsequently had to undertake before it could lease the premises again. This amounted to £3.3mn.
The site included a distribution centre, office and warehouse space, as well as two helicopter hangars and car parks.
“In the final six weeks of the term of the lease, [Sports Direct] started removing the mezzanines and racking,” said Mills & Reeve, representing JPMorgan Europe. “They made a poor job of this and ran out of time . . . there was considerable debris on site, numerous projecting fixing bolts in the floor, and poorly disconnected services including safety equipment such as the fire alarm and sprinklers,” they added.
They claimed that the bank lost £1.8mn in potential rent during the time it took to refurbish the property and advertise it. They are also asking for interest to be applied from November 2022 until payment is made on the £3.3mn. The balance of the £5.4mn JPMorgan is claiming concerns this interest, as well as other miscellaneous payments such as a surveyor fee.
The bank claimed it provided Sports Direct with a report in November 2022, breaking down the various costs, some of which has since been updated for the court. The retailer should have responded under a so-called dilapidations protocol at the time but it did not, it added.
Sports Direct and JPMorgan declined to comment.
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