Monsoon has had its CVA proposal approved so rent will be reduced on about half its stores and with no closures.
Monsoon and Accessorize's long awaited CVA proposal has been published and the company is asking landlords for reductions in rent on most of its 258 leased stores. The firm said that no store closures are planned but that rents are unaffordable, given "fundamental changes" in the retail sector.
Peter Simon, who founded Monsoon as a London market stall in the 1970s, is thought to have offered to invest £34m in the 270-shop fashion retail chain to keep it afloat. In addition, Landlords have been offered a share in the future profits, worth up to £10m in return for rent cuts.
Their CVA was delayed as the directors waited to see the result of the Arcadia CVA. Now that Arcadia's CVA has been approved, Monsoon is hoping that their proposal will be looked upon favourably. However, it has been reported that some landlords do not believe that the business is actually insolvent so as to warrant the use of a CVA.
This latest CVA will test the patience of landlords who are seeing their rental income decline. What does this mean for rental values across the High Street? Intu Properties plc, the shopping centre landlord, has already seen a fall in its share price as investors fret about lower rental income.
The fact that no store closures are planned is good news for the sector and employees. However will the proposal guarantee its survival?