The retail and hospitality sectors were already reeling from the twin assaults of online competition and Brexit. News that the UK response to Covid-19 is to move from containment to delay suggests a third significant adverse driver to footfall in the immediate future.

With any restriction on movement, the ability to meet and socialise, or indeed simply to shop, the impact on tenant cash-flow may be more significant than any short-term measures announced by the new Chancellor in yesterday’s budget. Even a return to historically low interest rates might not be enough for cash-strapped retail tenants to survive.

Informal postponement discussions with bankers and landlords would of course be one option open to any property based retail business. As the quarter day approaches, there is however one existing re-structuring tool available that should not be over-looked; the company voluntary arrangement (CVA).

Although the CVA fell out of favour in an era of easily accessible administration processes in which the object was to re-acquire the underlying business, there is a flexibility in a typical retail CVA that allows a strong underlying business to continue with the brand, management structure and existing equity.

A successful retail CVA will require detailed management projections for creditor review, and an open approach from both the Company and its creditors to the debt and continuing operating costs that are to be compromised in the CVA.

Although there are powerful vested interest groups for which a retail CVA is anathema, the choice of failed retail chain, and an empty space with rates consequences, or a continuing business even if a rent reduction is required, can drive successful landlord engagement.

To discuss CVAs in further detail, please contact Simeon Gilchrist or Head of Restructuring, Ali Zaidi.


Covid-19 Resources


Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.

Please also see a copy of our terms of use here in respect of our website which apply also to all of our blogs.

Latest Blogs See All

Share by: