Retailer rescue with CVA

10 August 2017

Are you a retailer with serious financial problems

Rents due for payment and sales falling?

Do you have some poorly performing shop units and cannot get rid of the rent liabilities?

Talk to us now about how we can help multiple retailers and other types of retail business restructure and cut loss making activity.

We can determine lease obligations, remove staff at low cost and negotiate with your bank! Read our 120 page experts guide to CVAs.

In the last couple of years many High Street names have failed.

See full list here on the Centre for Retail Research website

It seems too that when times get tough the marginal or secondary site stores suffer most, so how do you get rid of those?

Without recourse to shareholders for capital or debt/bond facilities to ride out the storm many larger groups are entering protective insolvency, closing stores or trying to survive by restructuring.

Fragility is the order of the day for undercapitalised companies, meeting bank covenants, meeting rent quarter days and paying VAT /PAYE when due are impossible juggling acts to achieve when cash take at the till is below budget.

There is also an increase in business rates for many businesses in built up cities, like London, due to the changes imposed by the government.

So how can KSA Group help a retailer restructure?

Where a retail group has a number of badly performing stores but the remainder are viable/profitable then it is enormously difficult to stop the hemorrhage of cash (even if the bad stores are shut down, rent and overheads are still payable). Normally a retailer can only hope that the landlord will let the company assign or surrender the lease, obviously the landlords business requires tenants paying rent, not empty properties. Too many vacant properties could mean that their business model is not viable.

With the inherent power of the lease they will be very unlikely to allow surrender without a price being paid. Even assignment may lead to future problems if the assignee is not financially strong.

Using a company voluntary arrangement (CVA) we have helped companies to exit those non performing properties/shopping centres and terminate the formal lease, thus crystallising the liability. Rent payments are stopped and the landlord can be prevented from taking recovery action.

We are often asked - how can this approach work?

It is vital that the proposals are cogently structured and careful financial forecasts are prepared in support of the CVA proposal, then detailed negotiations must commence with the landlord to seek surrender or termination of the lease, if this is not forthcoming then the company should consider exiting the property before finalising/ publishing the CVA proposal.

KSA helps our clients with deal structure, turnaround management, building the proposals and forecasts, driving the deal with creditors and helping the board through the crisis. Please note that it is not generally necessary for Administration or Receivership to be used for this approach! Thus it is cost effective and powerful with negligible cashflow consequences. Stock and fixtures (as long as not landlords improvements) can be used elsewhere in profitable stores.

Talk to us now, call Iain Campbell or Keith Steven for more details: 0800 9700539

Want to know more about KSA Group?

See here for client case studies. See our testimonials page for what our clients say about us.

Retailer CVA Case Studies

Our furniture and design retailer client successfully exited their CVA in 2017. Below outlines a brief overview of its profit and loss account:

"Keith we will gladly give anyone a glowing reference for KSA Group, what you achieved for our company was excellent. Now we are away from the high rent mall shops, our factory shops are doing really well. Without your help in re-organising the company's store mix and debt, I know that we would have gone into liquidation"

A quote from the managing director of a mid sized fashion chain with high street, mall and factory outlets, we closed all the non performing stores and helped him save his company. He will vouch for KSA Group's work, why not give us a call now? 0800 9700539 or you can call Keith Steven

"Keith we will gladly give anyone a glowing reference for KSA Group, what you achieved for our company was excellent. Now we are away from the high rent mall shops, our factory shops are doing really well. Without your help in re-organising the company's store mix and debt, I know that we would have gone into liquidation"

A quote from the managing director of a mid sized fashion chain with high street, mall and factory outlets, we closed all the non performing stores and helped him save his company. He will vouch for KSA Group's work, why not give us a call now? 0800 9700539 or you can call Keith Steven on his mobile 07974 086779.

Categories: Retail, CVA, What is a CVA or Company voluntary arrangement?

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