A restructuring plan agreed between failed hair salon operator Regis and its creditors was not “anti-landlord”, Matthew Weaver, a lawyer representing the agreement told the High Court today.
High Court judge Mr Justice Zacaroli has been hearing a challenge brought by a group of Regis’ landlords to the agreement for the last week. The case is scheduled to end today.
Regis traded as a national chain of hairdressers under the Regis and Supercuts brands until it went into administration in 2019.
However, in 2018, while facing financial difficulties, the salon group entered into a company voluntary agreement with its creditors. Although the CVA has been discharged, the landlords have been fighting a legal challenge against the agreement’s nominees.
According to lawyers at Irwin Mitchell, the case is being viewed as a test case as landlords, particularly retail landlords, are becoming concerned that CVAs are becoming increasingly onerous to them.
At today’s hearing Weaver addressed this point.
“While the CVA will no doubt be painted as an anti-landlord CVA… the company was prepared to listen to complaints brought by the landlords.”
He said that there was “no attempt” to “punish” landlords, and the CVA was an attempt to save the company. In addition, he said that there were some “self-help measures” that the landlord could have used, “but they didn’t avail themselves of them”.
Over the course of the hearing the landlords have been arguing that inadequate disclosure was made about the number of transactions and that they were “unfairly prejudiced” by the process.
Lawyers at Irwin Mitchell, who have been following the case, point out that there has been a lot reference made to the CVA dispute over high street fashion retailer New Look, which is also going through the courts.
That case is due to go to trial later this month and is likely to conclude before Zacaroli J makes his ruling in today’s case.
“We are not surprised to see these fundamental topics finally coming formally before the court,” said Doug Robertson, an insolvency and restructuring partner at Irwin Mitchell.
“The balance between what progress should be allowed to adapt to changing economic and commercial needs, and selecting a suitable process containing proper safeguards is a difficult one,” he said. “We look with anticipation to Mr Justice Zacaroli’s determination on these important questions.
“A decision in favour of the New Look landlords, in particular, may curtail the creep whereby CVAs have been used to impose increasingly onerous terms on a subset of creditors, in practice almost exclusively retail landlords,” he said.
