A review of recent restructuring and insolvency activity in United Kingdom (England & Wales), including key legal developments and significant transactions.
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Landlords vs retailers: What the New Look legal case means for future of CVAs
September s CVA was New Look s second in two years (Getty Images)
New Look today defeated a legal challenge to its restructuring plan by a group of its landlords in a landmark case that experts say will clear the way for other retailers to use Company Voluntary Arrangements to combat the impact of the pandemic.
The ruling is likely to deepen tensions between tenants and landlords, as the former is emboldened to demand rent cuts and the latter feel increasingly unfairly treated by the courts.
In September last year the high street fashion chain secured creditor approval for a CVA – it’s second in less than two years. At the time it had enough cash to survive for a further month and was facing insolvency, according to today’s High Court judgement.
Kwasi Kwarteng MP, the business secretary, added that the moratorium will give firms “breathing space”.
“We’re doing everything we can to ensure businesses get the support they need to get through this pandemic and reopen when it is safe to do so,” he said.
However commercial landlords have slammed the decision, saying “well-capitalised businesses, who can but won’t pay rent, have raided our nation’s pensions and savings invested in commercial property – this scandal must stop”.
“With further rates relief and new grants, and a clear plan for re-opening, high streets businesses should be confident in approaching their property owners to forge an economic partnership in which they can agree how to manage rental debt fairly,” said Melanie Leech, chief executive of the British Property Federation.