Monsoon Accessorize is just the latest in a long line of companies to enter into a Company Voluntary Arrangement (CVA). A CVA allows a company to negotiate with their creditors to try to prevent the company going into liquidation or administration.
For high street retailers, landlords are usually the category of creditors hardest hit by CVAs. The agreement usually sees landlords forced to accept a lower rent for a set number of years as a compromise to prevent losing the tenant altogether. Some CVAs even split the retailer’s portfolio into the best and worse performing, and landlords in the worst performing shops are taking a larger rent cut.
Landlords are starting to wake up to the injustice here as they are not involved in the drafting of the CVA, but are presented with the CVA as a finished article to either accept or reject. There is a test case at the moment where the landlords are challenging this and seeking to get a seat at the table at an earlier stage.
Hopefully, if this is successful, it will allow landlords to contribute to the negotiation of CVAs and possibly change the perception by some that CVAs are being used as a tool for companies to reduce their rental liability and obtain more favourable lease terms, rather than as a genuine final attempt to save the company.
Monsoon Accessorize creditors have approved the retailer’s CVA proposals, which will see the retailer seek rent cuts across two thirds of its store estate.