Debenhams shares collapsed on Friday following the removal of the retailer’s chairman and chief executive by Mike Ashley a day earlier.
The retail tycoon, who owns just under 30% of the department store chain through Sports Direct, teamed up with fellow shareholder Landmark to eject Sir Ian Cheshire and Sergio Bucher from the board.
Following the Debenhams annual meeting on Thursday, Mr Cheshire stepped down as chairman immediately, but Mr Bucher will stay on as chief executive, although not as a director.
Mr Cheshire’s and Mr Bucher’s re-elections to the board were rejected by 56.62% and 55.85% of votes cast respectively.
Shares were down over 17% at 3.9p on Friday as investors reacted to the news.
It comes amid growing concern for the retailer’s future as it struggles with poor trading, a £500 million debt mountain and onerous lease obligations.
Debenhams is in discussions with its lenders to refinance its borrowings before a 2020 deadline, as it also looks to bring new sources of funding into the business.
It is widely expected that Mr Ashley, who recently acquired House of Fraser, will also look to pounce on Debenhams when he feels the time is right.
Last month Mr Ashley made public details of a £40 million loan he offered to Debenhams, but which the firm rejected.
In the meantime, Terry Duddy has been appointed interim chairman to replace Mr Cheshire.
Caroline Gulliver, analyst at Jefferies, said: “Both Cheshire and Duddy have extensive UK retail experience, including managing through a recession, and yet they’ve not been able to help Debenhams (so far) avoid this increasingly special situation.
“Constructive discussions with lenders had started before Christmas and we believe all options are being considered (maybe different types of lenders and/or an equity rights issue).”
On Thursday, the struggling department store also unveiled declining sales over Christmas.
Debenhams said like-for-like sales dipped by 3.4% in the six weeks to January 5, weighed down by the UK where sales were 3.6% lower due to weaker footfall.