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22 Mar 2010
Richard Fleming, the insolvency expert behind company voluntary arrangements s for the Suits You, Blacks and JJB Sports retail chains has said the sector could see a fresh wave of CVAs as the end of quarter rent deadline approaches.
Speaking to the Financial Times Fleming, a partner with KPMG, said the MArch deadline would place creditors, especially landlords, in the position of deciding whether to " support" tenants through to the end of the year.
Fleming has pioneered CVAs for retailers facing the challenge of having to negotiate deals with scores of disgruntled landlords at the same time. The breakthrough came with JJB, but others have followed most recently The Speciliaty Retail Group, owners of Racing Green and the Suits You mens stores.
CVAs are a means for companies on the brink of collapse to renegotiate their debts with creditors and avoid a formal administration process through the courts. CVAs requires the agreements of 75% of the creditors by value, but it is "bound" by the agreement to repay its debt. Critics, including landlords, have argued CVAs allow troubled companies to escape their full obligations.
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Landlords' real problems
Landlords may argue that CVAs allow troubled companies to escape their full obligations, but isn't that the point of a CVA?
If institutional landlords are discovering that the High Street tenants they thought were strong covenants are now facing insolvency, it is those insolvencies (and the landlords' risk management) that are the problem, not the CVA procedure.
Posted by: Chris Laughton, 23 Mar 2010 | 00:00