New Look poised to appoint advisers to trigger restructure

New Look is poised to appoint advisers from Deloitte to handle a restructure of the business via a potential CVA.

The young fashion chain, which operates more than 450 UK stores, is reported to be looking to switch them to turnover-based rates. It would be the first time a chain has implemented such a move on a blanket basis, if it goes ahead, according to This Is Money.

New Look began negotiations with landlords in June hiring CBRE to take handle the talks. At the end of June it was reported that landlords had been advised that if talks were unsuccessful the company would consider a pre-pack administration.

The CVA, which would be its second in two years with the first having been approved in March 2018, is said to be supported by the chain's bondholders. However it will require widespread approval from landlords to be successful as CVAs require sign-off from 75% of creditors.

While New Look is said to have over-expanded its store estate, the locations of its stores do place it well to take advantage of the new retail landscape post-lockdown. With many people still working at home and avoiding city centres, New Look's stores, which tend to be based on local high streets, could benefit from shifting consumer behaviour as shoppers stay local.

If its plans go head it will be the latest in a line of retailers to use some form of insolvency process to reconfigure rents and stores estates in light of the COVID-19 crisis.

Just last week, M&Co carried out a pre-pack administration to offload nearly 50 stores, while Monsoon Accessorize was sold back to its founder to enable it to close a large number of stores. Debenhams and Hotter Shoes are among those currently operating under CVAs.

Others said to be considering CVAs include Jigsaw and River Island.