Landmark CVA case gives landlords a boost
Landlords boosted as judge rules against Powerhouse in landmark CVA case
A High Court
judge has ruled that the use of company voluntary arrangements (CVA) in
insolvencies unfairly undermines the rights of landlords to receive rents.
The landmark ruling on the case of electrical retailer Powerhouse will make
it harder for parent companies to skirt the rental obligations of subsidiaries
in financial difficulty.
The FT
reports that Prudential, Legal & General,
Hammerson
, Derwent London and Land Securities had all backed the case.
Lawyers have been warning that if investors lost the case, the property
industry would suffer a hit of billions of pounds.
Powerhouse had entered a CVA in order to avoid paying rent on closed stores.
A CVA allows a company to avoid liquidation by negotiating with creditors and
reaching informal agreements.
Further reading:
Powerhouse enters administration
Landlords’ loss is professionals’ gain
Powerhouse hits back at CVA claims