New Look wins landlord battle over CVA

New Look has won its court battle against landlords who were challenging the British fashion retailer’s company voluntary arrangement (CVA).

In September 2020, New Look received the green light from creditors to go ahead with its second CVA in less than two years.

Under the terms of the restructuring, the retailer switched to turnover-based rents at 402 of its UK stores and null rents for 68 others.

A group of landlords including British Land and Land Securities challenged the move, arguing that they were unfairly treated, and that the majority of the votes in favour of the restructuring came from creditors who were “unimpaired by the CVA”.

But Justice Zacaroli rejected their arguments on all counts.

Doug Robertson, restructuring and insolvency partner at law firm Irwin Mitchell, said in a statement: “Had the jurisdiction challenge been successful, it would have placed limits on the aggressive use of CVAs and shifted such compromises into the restructuring plan market.

“This decision retains the use of a CVA as a tool in complex, differential compromises and arrangements and is in line with increased emphasis on providing debtor protection to enable it to restructure its affairs with a view to financial recovery.”

A long list of British fashion retailers have launched CVAs in the past year as they look to mitigate the impact of the pandemic, including LK Bennett, Ann Summers, Moss Bros, Clarks, New Look, AllSaints, Bair Group and Monsoon Accessorize.