Clarks CVA sparks landlord fury

Landlord organisations have hit out at footwear retailer Clarks’ company voluntary arrangement, with the BPF’s Melanie Leech calling it “everything that is wrong with UK insolvency legislation”. The troubled retailer’s CVA was approved by more than 90% of its creditors following a vote today. The outcome will pave the way for a £100m private equity deal with LionRock Capital, which stipulated the CVA as a condition. Under the CVA, 60 of its 320 stores will move to nil rent, while the portfolio will switch to a turnover-based rent model. The BPF and Revo have since criticised the retailer for failing to sufficiently engage with its landlords on its restructuring plans. Melanie Leech, chief executive of the BPF, said: “Far from being treated as valuable economic partners with an interest in the ongoing success of Clarks, individual property owners were not given any meaningful opportunity to engage, on behalf of the savers and pensioners they represent, before the CVA was launched and yet they are the only class of creditor being asked to permanently and irrevocably write down what they are owed. “From a total of 354 stores, this CVA is forcing the landlords of 305 stores to accept non-payment of all rent arrears, without first trying to reach consensual agreements. “This behaviour undermines the government’s code of practice, which explains how tenants and property owners should be working together to negotiate rental agreements and map out shared plans for economic recovery in dealing with the impact of Covid-19 and government restrictions.” Vivienne King, chief executive of Revo, said: “The Clarks CVA is continuing the very worst insolvency practice, with no meaningful vote for property owners on drastic measures that disproportionately affect them. “During the pandemic Clarks has benefited from the furlough scheme and business rates holiday and still it has been failed by its management. “It is outrageous that it is landlords who are expected to face the consequences and prop the business up financially, having already received no rent since March and with arrears largely written off and no prospect of a meaningful income in the near term. How many more of our iconic brands are going to manoeuvre out of their contractual commitments? “The abuse of CVAs and the moratorium on eviction have distorted the market and damaged the UK’s reputation and meant property owners have been forced to absorb far too much of the financial pain on the high street. This simply is not sustainable, and it is short-sighted for government to fail to protect long-term investors when significant private capital will be needed to help ‘level-up’ our towns and cities.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette Picture © Maureen McLean/Shutterstock