Almost all businesses in hospitality and retail have been in negotiation with landlords to try to secure rent holidays, rent deferrals or rent reductions (or all three). For those in a precarious financial position the prospect of a CVA has had a significant influence on the negotiations, especially if other unsecured creditors outweigh landlords in value. Some landlords have been sceptical about the prospect of tenants securing concessions through a CVA. This judgment changes the landscape significantly and puts tenants in a significantly stronger negotiating position.
New Look today defeated a legal challenge to its restructuring plan by a group of its landlords in a landmark case that experts say will clear the way for other retailers to use Company Voluntary Arrangements to combat the impact of the pandemic. The ruling is likely to deepen tensions between tenants and landlords, as the former is emboldened to demand rent cuts and the latter feel increasingly unfairly treated by the courts.