Shares in the 241-year old group, which had soared on Wednesday after Debenhams said it was considering a 61.4 million pound takeover offer from Sports Direct, were down 28.5 percent to 2.12 pence in early Thursday trading.
Debenhams said a majority of holders of its 5.25 percent senior notes due 2021 had agreed to change the terms of their bonds. That means it can press ahead with securing 200 million pounds of extra funds from lenders and pursue restructuring options.
Debenhams warned last week that some of those options would result in no equity value for its current shareholders. These include Sports Direct, with a near 30 percent stake.
Sports Direct last year bought department store chain House of Fraser out of administration for 90 million pounds and has been trying to wrest control of Debenhams for months.
Its proposed offer came with various conditions, including that Ashley, the owner of Newcastle United soccer club, be immediately installed as Debenhams' chief executive and the termination of the noteholder consent solicitation process.
(Reporting by James Davey; Editing by Mark Potter)