An interesting tension here. CVAs were supposed to be a rescue mechanism to help struggling businesses through difficult times and get back to solvency, but their efficacy even before the last couple of years in achieving that aim (rather than simply staving off administration, either immediately or shortly afterwards) has always been open to debate.
Landlords have always drawn the short straw, particularly in the retail sector where good relationships with suppliers have a perceived greater importance. Combined with the nominal value often attributed to the landlord's interest in the struggling business this means the landlord is often an unwilling passenger, so is it really any surprise that the breaking point might be arriving?
It is surely time for serious reform in this area because there is no question that for all the businesses genuinely in need of the CVA process, there are some who appear to be gaming the system. Equally important when it comes to traditional retail, it must also be time for landlords and tenants to start seriously exploring more creative lease terms (particularly regarding rent and review of rent) - "market" lease terms are not carved in stone and a dogmatic approach will lead to voids.
Deloitte has warned that landlords resistance to CVAs meant that struggling companies were running out of options. It’s figures show that 124 retailers collapsed into administration last year, after 125 did so in 2018 and 118 in 2017. But that could be on the rise in 2020 as CVAs decreased towards the end of 2019, leading to a potential spike in administrations