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Landlords Settle Case Against New Look's CVA Before Court of Appeal

3rd March, 2022

3 March 2022

New Look’s landlords have just announced that they have settled with the company on the day before a crucial hearing at the Court of Appeal.

17 May 2021

New Look Landlords have been granted leave to appeal to the Supreme Court over their treatment in the CVA.

Yet again the High Court has upheld the power of the CVA mechanism as a way of ensuring that a company can survive if the majority of its creditors (by value) agree to allow it time to get back on its feet.  Landlords feel that it is unfair but if it is not to be the creditors who else?  A panel of “experts”?  A quango?  The Government?

Landlords complained that the switch to turnover rent “fundamentally rewrites” leasing agreements.  Unfortunately, when a company becomes insolvent and, in the case of administration, all contracts are “rewritten”.

There is a shift in the balance of power between landlords and tenants given the loss of footfall on the High Street and the rise of online shopping recently.  However, if everyone rushes back to the shops, post pandemic, maybe the landlords will be able to take a share on the increased turnover?

17 March 2021

It has been reported that New Look has entered a High Court battle with two of its landlords; British Land and Land Securities, over its proposed restructuring plans.

In total, there were four landlords who challenged the CVA which involved switching stores to turnover based rents.

The argument is that switching to turnover rents ‘’fundamentally rewrites’’ leasing agreements and deems the payments of arrears as ‘’unfair’’.

10th November 2020

New Look announce completion of its refinancing scheme which included a debt-for-equity swap to reduce debt from £500m to £100m and a £40m cash injection.

The refinancing scheme was first mentioned in August, at the same time as its (now approved) CVA was first announced.

CEO, Nigel Oddy said: “I would like to thank our banks, bondholders, landlords and creditors for their support during our financial recapitalisation process and CVA. Completion of the transaction today means we now have significantly enhanced financial strength and flexibility, and a sustainable platform for future trading and investment. Looking ahead, notwithstanding the challenging market conditions, we are focused on delivering our strategy to enhance our position as a leading convenient broad appeal fashion destination”.

2nd November 2020

It has been reported that 2 landlords, British Land and Land Securities have challenged New Look’s CVA casting doubt on the company’s ability to survive.  The new lockdown will hit New Look hard as they only have a small proportion of their sales online (20%). Challenges against CVAs have not been successful in the past.

5th September 2020

In an unexpected outcome – New Look’s creditors have approved its CVA proposals when put to a vote today. Creditors approved with a 75% majority vote in favour.

The CVA features no store closures and saves all 11,000+ jobs. It looks to move more than 400 of its UK stores to turnover-based rental models, have an enhanced landlord break clause, and a three-year rent holiday on its 68 remaining stores.

14th September 2020

British Land, a landlord of New Look, owning 19 of its stores, plans to oppose its CVA proposal laid down to vote on tomorrow. Landsec, of whom own 10 stores also are believed to oppose as are Hammerson.

The possibility that New Look’s biggest landlords will vote against the plan, does not appear good for the retailer. Its chance of survival is thrown further into red.

What will the outcome be tomorrow?

6th September 2020

It is not looking promising for New Look since around ten of its landlords have been reported to of rejected its CVA proposals, to be voted on by creditors in the next 9 days. Can the table still turn? Or is liquidation coming even more unavoidable now?

26th August 2020

New Look has announced it has reached an agreement with its financial creditors. This involves investing £40m in new capital and ”significantly de-leveraging” its balance sheet. The group expect this to be complete on or before 31 October 2020.

The company has also announced that it is launching a CVA, so asking landlords to accept new turnover-based leases across its portfolio.

The fashion retailer also said it is launching a debt-for-equity swap on its current debts, looking to lower those from £550m to £100m.

The British Property Federation have criticised the CVA proposal due to ”inaccuracies”.

Drapers report more.

10 August 2020

According to This is Money, New Look is reported to be considering a company voluntary arrangment (CVA) since it looks to switch to turnover-based rents.

Advisors from Deloitte are expected to be appointed as soon as this week.

If a CVA is used, this would not be the first time for the company. The retailer used one in 2018 when landlords voted in its favour as it was used to improve the operational performance of the company.

01 July 2020

It is reported that New Look has given an ultimatum to landlords; trying to reach an agreement to move to turnover-based rents for its 500-strong store estate.

Consultancy firm, CBRE, have been hired to help with the process. If discussions with landlords are not successful, likelihood of the retailer falling into a pre-pack administration is high.

If a pre-pack is used, this would be the second financial restructuring it has undergone in less than two years, after its debt-for-equity swap with stakeholders in January 2019. At this last restructuring, New Look moved onto monthly rents for most of its portfolio and asked for rent holidays for some of its stores.

Talks with landlords have been happening for most of the month though concern rises that some will block the proposal.

A pre-pack has been discussed and is ‘’the last thing it wants.’’

A spokesperson said, ‘’We are committed to seeking a consensual agreement with landlords to move to turnover rents, and work in partnership with them as we continue to navigate these increbily challenging and uncertain times together.’’

The retailer employs 12,000 people across its UK and Ireland business.

New Look are not the first to look at a move to turnover rents amid the covid-19 pandemic. Frasers Group are the latest to be looking at doing so. Other retailers have appointed administrators as a result of the pandemic: Debenhams, Laura Ashley, Cath Kidston. Some have also refused to pay March quarterly rents.

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