KPMG warns retail CVAs could rocket

A wave of Company Voluntary Arrangements is expected from retailers according to KPMG as the country comes out of the recession.

CVAs are an administration process where debts and contracts are renegotiated by an insolvency practitioner for a company. KPMG, which led the first listed company CVA for Blacks Leisure, expects the number of theses insolvencies to double in the coming year the Financial Times reported.

Brian Green, restructuring partner at KPMG, said: “We’ve proposed eight CVAs in the past year and our current pipeline suggests we will propose double this figure in 2010.”

"Cases such as JJB and Blacks Leisure, combined with insolvency regime reform, has prompted many distressed retailers to consider a CVA,” he said.

CVAs have previously been criticised by landlords where rent contracts have had to be renegotiated.

Mark Bowles, property director for HMV group told the Financial Times CVAs: "Don’t offer everybody a level playing field, and allowing firms to be released from lease liabilities is an inappropriate way to manage the situation.”

The British Property Federation, which represents landlords is to meet at a retail summit today, to discuss CVAs.

Further reading:

Increase in retail CVAs expected

KPMG floats Blacks Leisure CVA plan

CVA articles