Landlords to resist retailers use of CVA to slash rent

A group of high street landlords is said to be preparing to challenge retailer's company voluntary arrangements, arguing they are being pressured into agreeing to rent reductions.

Struggling retailers, including Mothercare and House of Fraser, are seeking out CVAs in order to avoid insolvency. However, these retailers are now met with increasing resistance from leading property owners, who are concerned by the growing list of CVAs this year, by retailers such as New Look and Byron.

Property firms Legal & General and Westfield are reportedly seeking advice from restructuring experts Begbies Traynor and property agency JLL to help halt House of Fraser's CVA as the department store chain prepared to launch a company voluntary arrangement.

Concerned landlords are set to demand detailed forecasts for a post-CVA performance and may vote against the CVA if they do not agree with the department store's proposed terms, according to report from The Guardian. The move comes weeks after Sanpower Group, the parent company of House of Fraser Group Ltd, confirmed it was seeking a CVA and aimed to shut a number of stores by early 2019 as part of its wider restructuring plan.