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Landlords push back against Clarks CVA

Lauretta Roberts
09 November 2020

The British Property Federation has hit out against the proposed CVA at Clarks saying the process is unfair since landlords have little chance of blocking the move if they opposed it.

Landlords will only hold 25% of the vote for the CVA, yet they are the only creditors to have their debts, totalling £160m, to be compromised by the CVA. The votes of other creditors are likely to carry the CVA through since it would need 75% of votes to pass.

“This abuse of CVAs forces property owners to absorb significant losses with little attempt to build a recovery strategy they can support as economic partners,” British Property Federation CEO Melanie Leech, told The Sunday Times.

Clarks has secured a £100m investment from Hong Kong-based private equity house LionRock Capital but the injection of cash, which would lead to the Clarks family losing their majority stakeholder status, is contingent upon the CVA gaining approval.

The historic footwear chain is seeking to have rent suspended on 60 of its 320 sites with the rest converted to turnover-based rent deals. The proposal is to be put to a vote next month.

Speaking last week when the proposal was unveiled, Clarks interim finance chief Philip de Klerk said: “In order to address the permanent shift in structural shopping behaviour as a result of the COVID-19 pandemic, the CVA is being launched out of absolute necessity.

“The proposal to creditors outlines a combination of a reduction of rent and a move to rebase Clarks’ rental cost base through a turnover-based model that aligns to future performance and reflects the wider retail market.

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