Landlords approve JJB insolvency deal

KPMG ADMINISTRATORS have managed to obtain landlords’ agreement of a Company Voluntary Arrangement (CVA) proposal for struggling retailer JJB Sports.

Earlier today the creditors voted through the CVA proposal which will see them receive between 24.6p to 29.2p for every pound they are owed. An administration would likely see creditors receive 1.1p for every pound invested.

CVAs usually repay stakeholders a portion of debt over a period of time, while allowing the business to continue trading. A CVA must be voted for by 75% or more, by value, of creditors to be pushed through.

Brian Green, restructuring partner at KPMG and supervisor of the CVA, said: “We have worked hard to improve the CVA model and – while a CVA must always offer a better return to creditors than administration – we have also been mindful of specific concerns voiced by the landlord community.

As part of the CVA, landlords will be able to share in the future financial success of the sports retailer.

The CVA offers renters between £2.5m and £7.5m in shares or cash if JJB’s market performance increases by 2013.

The retailer plans to exit 43 unprofitable stores by April 2012, and possibly a further 46, if they fail to hit the targets by April 2013. Landlords will also offer properties at a 55% discounted rate and rental payments will be paid monthly not quarterly on all properties.

Liz Peace, chief executive of the British Property Federation, said: “It is extremely welcome to see a “clawback” arrangement included in this CVA and we hope that this establishes a precedent that should form part of all future CVAs.

“After all, it is only fair that having taken a hit and allowed JJB Sports to avoid administration, landlords’ shareholders – many of whom are pensioners – are compensated when the company returns to health.”

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