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New Look and landlords head to the High Court over CVA

Lauretta Roberts
17 March 2021

Four landlords, including British Land and Land Securities (Landsec), will be making their case against the CVA of high street chain New Look in the High Court today.

Landlords will argue that the retailer should pay a "bare minimum market rent" on its stores as part of a financial restructuring arrangement that was approved by creditors last year, The Times has reported.

Under the terms agreed by creditors, New Look would pay zero rent on 68 of its stores and just 2% of turnover on 402 others. The retailer said the move was necessary to ensure its future.

As the Covid-19 crisis swept through the country a number of fashion retailers undertook CVAs which involved a shift to turnover-based rents on some or all of their store estates.

AllSaints, Hotter Shoes, Ann Summers and Monsoon Accessorize are among those to have used Company Voluntary Arrangements to some extent, which give firms breathing space by allowing them to pay back an agreed portion of their debts over time.

For a CVA to be approved it must gain more than 75% approval by value of debt from creditors. New Look's deal was approved in September but landlords had already pushed back with British Land, which owns 19 New Look stores, and Landsec, which owns 10, voting against it. However they were outvoted by other creditors.

More recently footwear chain Clarks agreed a CVA, which was also met with resistance from landlords, that switched the majority of its 320 stores to turnover-based rent with no rent payable on 60 sites.

The CVA deal was crucial for Clarks as investor LionRock Capital said it would only inject £100m into the chain if it went ahead. It was waved through by creditors in November and the deal completed this week. In that case landlords only accounted for 25% of the total vote so did not have the power to vote the move down.

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