BHS – CVA and the importance of Landlord participation.
It can’t have escaped notice that one of Britain’s most iconic brands on the UK high street has been struggling financially in recent years, seeing its profitability decline as it has sought to respond to changing customer behaviours and increasing competition.
Along with a large pension fund liability, BHS “bricks and mortar” liabilities to its Landlords forms a large portion of its cost base.
The creditors of BHS Limited and BHS Properties Limited voted through a proposed Company Voluntary Arrangement (“CVA”), which will enable the business to restructure its property portfolio. Landlords have effectively accepted a deal, accepting reduced rents for 2 categories of stores, for at least 10 months, to allow them time to implement a new financial plan for the business which will hopefully secure its future on the High Street.
KPMG, the newly elected Supervisor of the store’s CVA with its creditors, state on their website that;
“Today’s CVA proposals are one facet of a wider turnaround plan, and specifically tackle one of the business’ largest fixed costs, the onerous lease arrangements across its UK-wide store portfolio.”
This CVA is a sign of Landlords’ increasing pragmatism, in supporting BHS through this process. Whilst rents will mostly be decreased, Landlords at least have an income stream in the short term, giving them the opportunity to consider other options for their properties.
If you wish to talk about any company restructuring or insolvency matters and how they might affect you and your business or premises, our expert team can help.
Please contact Pamela Muir, Partner, in the first instance.
Tel: 0141 332 5666< Back