Landlords group cries foul over New Look CVA plan
Some New Look landlords are unhappy following the retailer’s CVA proposal and the body that represents them, the British Property Federation, has accused the company of using its plan to “permanently rip up leases”.
The group also said that the plan fails to meet best practice and contains terms that its members will object to. It believes CVA plans should be about temporary measures to see a business through tough times rather than being used as a way to change lease terms for much longer periods of time. And it added that CVAs shouldn't be used as a mechanism to enforce turnover-based rent deals.
New Look has proposed its second CVA in three years and wants landlords to accept very low turnover-based rents on 402 stores and zero rents on another 68 as part of its 36-month plan.
The company had been in active discussions for some time with landlords about moving to turnover-based rent deals. This followed the last CVA that saw it switching to monthly rent payments rather than quarterly.
But landlords haven’t fallen in line and the CVA is another way that it might be able to switch to terms it said are being proposed “out of absolute necessity”.
While landlord dissatisfaction is understandable, New Look has included a clause in the CVA that gives the owners of the property it occupies the right to take on new tenants at the stores if it can find any that will pay higher rents. New Look is also agreeing to pay service charges that could add up to £20 million.
New Look needs the CVA to be passed in order to complete its financial restructuring that would see £440 million of its debt being swapped for equity and also grant it a £40 million loan to see it through the crisis.
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