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Poundstretcher's approved CVA leads to more than 60 of its landlords serving notice

Written by Robert Moore Marketing Manager 7 December 2021

Poundstretcher's awards 10% pay rise to staff following successful Year Post CVA

7th December 2021

The budget retailer recorded sales of £140 million in the six months to the end of September in spite of external cost pressures. Last year it entered into a company voluntary arrangement (CVA), which allows it to pay back certain debts over an agreed period, as well as closing stores and making more than 200 redundancies.

Poundstretcher chief executive Aziz Tayub said he was “proud and inspired” by the way the company had risen to every challenge, from the CVA to the pandemic, with resilience, courage and a caring attitude.

2021 September update:

After demanding rent reductions as part of a restructuring plan last year, Poundstretcher has been served with a notice by more than 60 landlords to vacate its stores. 

As part of the rescue plan, rent cuts were demanded from hundreds of landlords with the whole estate switching to monthly payments. The estate was split into groups A, B, C. The differences were most noted as below:

Group B Landlords: told that their premises were only viable with rent reductions

Group C Landlords:  told that their premises were only viable if zero rent is paid

C and B Landlords had the ability and rights to termiate the variety discounter's leases. 

A year on and a report has been filed at Companies House to reveal the progress following the CVA. It showed that since the CVA was approved, ''14 category B landlords and 49 category C landlords have exercised their rights under the CVA requesting the company to vacate the relevant sites.”

Retail Gazette report on this matter here.

July 18 update

With the CVA underway, 10 out of 23 area managers were told they would be facing redundancy this week. A source shared that for the remaining 13, they are left with the ''impossible'' task of overseeing 40-50 stores each. 

Additional to these redundancies, 6 staff in buying and loss prevention also face redundancy. 

The CVA put more than half of Poundstretcher's 450-store estate at risk as it seeks rent reductions. 

July 6 update: Poundstretchers has had its CVA proposal approved. 

More than 90 per cent of creditors voted to approved the CVA plans, including the majority of landlord, surpassing the 75 per cent total required in order to pass the resolution.

Will Wright, restructuring partner at KPMG and joint supervisor of the CVA, said: "The approval of the CVA provides a stable platform from which the company can continue to operate across a more focussed store portfolio."

Poundstretcher launch a company voluntary arrangement (CVA) proposal which features significant rent cuts across its 450 UK stores. 

KPMGs' Will Wright and David Costley-Wood are the proposed nominees.

The unveiled proposal sees 94 stores continuing to pay the same rent and 84 stores experiencing a reduction of rent between 30 and 40 per cent over three years. The remaining 253 stores would pay six weeks rent in full before adopting them based on each stores own ''commercial merits''

Poundstretcher said the CVA is part of a wider turnaround plan it is involved in, seeking to restructure its UK store portfolio, realign head office costs and stem losses from underperfoming outlets. The retailer looks to pave the way for investment into its core estate and product offering.

Poundstretcher experienced a loss-making period at least a year before the coronavirus pandemic hit, making the issues worse.

It is in the directors' intention to put the retailer into administration before the decision is made on the CVA. The CVA proposal is to take place on 2 July in which 75 per cent creditor approval will be needed for the CVA to go ahead.

Over 5,500 people are at risk of losing their jobs; across its stores, head office and warehouses.

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

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