The use of company voluntary arrangements on the high street is coming under fresh fire, with retail giants such as HMV calling for a "level playing field" in terms of property payments as use of the insolvency procedure continues to grow.
In a speech to the British Property Federation (BPF) summit today, HMV's property director Mark Bowles argues: "CVAs don't offer everybody a level playing field, and allowing firms to be released from lease liabilities is an inappropriate way to manage the situation. Often, companies get themselves into these positions because they rapidly acquired a number of costly long leases."
The CVA procedure typically allows a retailer to agree compensation with landlords for closing stores and slashing rents. The alternative to a CVA is often an administration that results in big job losses.
But Blacks Leisure has courted controversy by already unveiling plans to open new shops in areas it had left after completing its CVA in November. Liz Peace, the BPF's chief executive, said: "Many landlords were spitting blood at the news Blacks was to re-enter locations it had just exited... the property industry can't be expected to bail out firms that have over-expanded or simply made bad business decisions."
A Blacks spokesman responded: "Landlords have been pragmatic – they recognise that the CVA was necessary to secure the future of our ongoing estate and in a number of cases offered us a more suitable store in the same town."Reuse content