Court date set for Virgin Active to avoid administration

A High Court judge today set the timetable for a restructuring plan through which gym group Virgin Active seeks to stave off administration, but which is opposed by a number of landlords. Mr Justice Snowden set the date for a creditors’ meeting to take place as 16 April 2021, at which creditors will be asked to approved the restructuring plan, which will see some leases terminated and certain other landlords forced to accept less in rent. The matter will then return to court for the final “sanction hearing”, scheduled to begin on 29 April. The judge said that the evidence was that there will “undoubtedly be a vote in favour” at the creditors’ meeting, despite the affected landlords’ objections. As a result, he said that the sanction hearing – at which a number of those landlords will challenge the fairness of the plan – would, as a result, be the “main event”. Tom Smith QC said that the short timetable was necessary in part owing to the more serious Covid-19 situation in Italy, where certain affected premises are located and may not be able to reopen. He said that it is necessary to complete the restructuring by the week commencing 10 May, in order to avoid the company running out of liquidity and being forced into administration. The restructuring plan has been put forward as a means to allow the company to continue to operate as the UK exits lockdown. Under the plan, Smith said that its sites had been split into five categories, based on profitability (with the fifth category being premises that have been sublet). The landlords of the “most critical” sites in class A will see no impairment, with the only change being that rent would now be paid monthly rather than quarterly. Class B landlords would see no impairment going forward, but outstanding rent arrears would be discharged with a payment equivalent to 120% of what they could be expected to recover in an administration. Outstanding rent would be treated the same for class C sites, but in addition future rent would be reduced by 50%, with landlords receiving a break right. For the loss-making class D sites, those leases would be terminated under the plan. Trade creditors and employees would be paid in full under the plan. See also: Virgin Active restructuring plan faces judicial scrutiny To send feedback, e-mail jess.harrold@egi.co.uk or tweet @estatesgazette Photo © Shutterstock