Monsoon Accessorize CVA gains approval

Monsoon Accessorize’s rescue plan, involving two company voluntary arrangements, has been approved by its creditors. The proposals were voted on today and while the precise outcome was not disclosed, the group said it had gained “a majority significantly above the required (75%) threshold on each proposal”. Paul Allen, chief executive of Monsoon Accessorize, said: “We are pleased with today’s result and would like to thank our suppliers and landlords for their continued support. “This action will help us to reshape our businesses for the future, and we will now turn our attention to the wider turnaround plan and delivering a sustainable and profitable business moving forward.” Landlords were promised up to £10m as part of a profit-share plan in exchange for their vote. The CVAs called for rent cuts of between 25% and 65% at 135 of 258 Monsoon and Accessorize shops. While the retailer said there were no closures planned within the proposals, documents seen by EG show rent cuts are not being sought for at least six stores on which leases can be exited on short notice. Founder and owner Peter Simon has also agreed a 50% rent reduction on its head office in west London, which he owns under a separate business. Simon has provided an emergency £12m facility on a secured basis. Under the proposals, he will offer an additional unsecured credit facility of £18m at 0% interest. Deloitte was appointed as nominees to the CVAs. Some industry figures have noted that the profit share plan could signal the growing use of incentives in CVA proposals, to secure support from landlords. Monsoon’s CVA processes were delayed earlier this month, after a vote on similar procedures at Sir Philip Green’s Arcadia Group was postponed. To win over the landlord support it needed, the Green family had vowed to provide all affected Arcadia landlords with an entitlement to a pro rata share of 20% of any equity value in the business. Stephanie White, associate at Stevens & Bolton, observed: “Monsoon’s landlords have backed the turnaround plan even though some of their rents will be slashed as a result. Landlords may have been persuaded to give their support to the CVA by the profit share that Monsoon offered, and it might become an expectation that tenants seeking CVAs in the future will offer similar sweeteners. “Monsoon follows Arcadia and Debenhams who also won the support of their landlords to join a growing list of retailers using CVAs. For some retail landlords though, the volume of CVAs must be managed carefully. “Whilst landlords will want to support their tenants to return to healthy trading, they have to balance their own books too, and landlords are coming under increasing pressure as the list of tenants protected by CVAs keeps growing.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette