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Landlords save 4,000 jobs by passing Blacks CVA as Flannels poses new one

On the eve of the first anniversary of Woolworths’ demise, landlords have saved over 4,000 jobs by agreeing to back a Company Voluntary Agreement keeping outdoor retailer Blacks Leisure afloat.

It comes as Borders stares over the brink and as clothing firm Flannels looks set to pursue a CVA as well.

Liz Peace, chief executive of the BPF, said: “We are pleased that by agreeing the CVA landlords have managed to save over 4,000 jobs. But we are concerned that the favourable terms of the CVA do treat some retailers differently from others. However, the landlords had very little choice in this matter.

“In all the CVAs we have seen, the driver behind them has been the banks who have demanded that the retailers shed under-performing stores if they wish to continue. It’s understandable that banks should look at things from an investment perspective rather than from a retailing one, but what this means is that CVAs will only be a way of maximizing someone’s investment rather than be a fair way of sharing the pain.

“While this CVA has been transparent and covered landlords’ empty rates payments on closed stores, it has not taken any bite out of shareholders’ or other creditors’ pockets. Landlords have borne all the pain, and, when you consider that many of our pension funds are invested with them, it is clear that this is not fair.”

The Flannels CVA could set a far more potent and damaging precedent than the Blacks CVA as it is seeking to compromise all creditors – not just close premises. It is taking all trade creditors and revaluing them at 60pc – which means they immediately would lose 40pc of what they are owned. They would then pursue a buy-off of lease with six months rents.

Given the uproar over the failed Stylo CVA, which attempted to pay turnover rents of 3pc rising to 7pc, the industry broadly feels that the KPMG CVA model has at least been equitable and has ensured landlords would not get hit by empty rates, which could well exceed rent in some cases. What has been starting to irk the industry is that all trade creditors have been catered for in full apart from the landlords. Additionally, there has been no sharing of pain across the retailers’ own shareholders – just those of the landlords.

For more information and all PR and media queries, please contact Andrew Teacher, Head of Media, ateacher@bpf.org.uk.

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Radio 4 (Today Programme) - Liz Peace

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