Richard Eaton examines company voluntary arrangements (CVAs) and their growing use in the commercial retail property sector.
Are CVAs on the rise?
Background to the Case
Monthly Law Update | Social Housing July 2018 Introduction Supply chain This update shows the main legislative and case law developments and statutory guidance issued in connection with the Social Housing sector from the last month (June 2018) together with links to the relevant sources where you can obtain further information. If you have any concerns about any of the developments outlined in this update, or if you require any advice on the effect of the developments or on how to respond appropriately, please contact:
The new housing administration regime for registered providers of social housing is now in force. Our latest Insight introduces the new legislation and highlights some of the key ways in which a housing administration will differ from a normal administration process.
Dubbed "the year of the CVA", 2018 has so far seen a spate of high profile retail insolvencies. Landlords are seeking to protect their position in this volatile climate.
The rules governing the actions landlords can take in insolvency situations are complex. They depend on whether the tenant is a company or individual, the specific insolvency process involved and whether the Financial Collateral Arrangements (No. 2) Regulations 2003 (FCAR) apply.
2018 has been described as “the year of the CVA”, especially in the retail and casual dining sectors. Although company voluntary arrangements can be a useful tool to compromise portfolios of leasehold obligations, there are certain situations where a CVA may be unsuitable.
1. When a full operational and/or financial restructuring is required
Cathryn Williams and Paul Muscutt, partners in the Squire Patton Boggs Restructuring & Insolvency team in London, interview Ian Fletcher, Director of Policy (Real Estate) of the BPF (the trade association for UK residential and commercial real estate companies) to get the BPF’s views on the recent spate of CVAs seeking to reduce/compromise lease liabilities.
Do you think the current use of CVAs is fair on landlords?
On the morning that Mothercare announced its CVA, its share price went up by 35% (from 20p to 27p) and now sits at 35p (up 75%) from the price the day before the CVA was launched.
The High Court has released an important decision for landlords and Insolvency Practitioners in the wake of the failure of the company voluntary arrangement (CVA) entered into by BHS Limited (BHS).
Following the liquidation of BHS Ltd, the High Court was asked to consider whether a landlord could claim full rent as an administration expense following termination of the CVA.
Background
Wright and another (Liquidators of SHB Realisations Ltd) v The Prudential Assurance Company Ltd concerned three principal insolvency processes applicable to companies under the Insolvency Act 1986: