Clarks CVA goes through but landlords are reportedly unhappy
Clarks managed to get its CVA voted through late last week, but landlord groups have accused it of not playing fair. The CVA will see it paying zero rent on 60 of its shops and will also see more than 300 stores having rent arrears wiped out and future rent bills drastically cut as turnover-based deals come into effect.
“I am very pleased that the CVA was approved today. This is a significant step towards the formation of our new partnership with LionRock Capital,” Philip de Klerk, Clarks’ interim CEO, had said on Friday when news that the CVA got 90% creditor support was announced.
Although landlords were part of the vote on the CVA, it has been reported that the deal got more support from other creditors, such as suppliers, the pension fund and shopfitters.
It seems that landlords were less enthusiastic. The Guardian quoted Melanie Leech, CEO of the British Property Federation, saying: “Clarks is exploiting the government’s moratorium on evictions, failing to pay rents owed since March, despite being able to reopen and benefiting from significant government financial support.”
Another trade body, Revo, echoed her unhappiness. “The Clarks CVA is continuing the very worst insolvency practice, with no meaningful vote for property owners on drastic measures that disproportionately affect them,” the newspaper reported Revo chief Vivienne King saying.
She said landlords are “expected to face the consequences and prop the business up financially, having already received no rent since March,” despite Clarks having benefited from the furlough scheme and the business rates holiday.
CVA deals have created controversy in recent years and especially this year. But with retailers reeling from store closures and often facing existential threats, it's hard to keep both landlords and tenants happy when it comes to leases.
The CVA winning approval was a condition of the agreement the Clarks founding family has struck to sell a controlling stake in the business to Hong Kong private equity firm LionRock Capital.
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