A High Court judge has rejected a legal challenge to high street retailer New Look’s restructuring arrangements brought by a group of disgruntled landlords.
Creditors voted in favour a company voluntary arrangement to help the stricken retailer in September, in a deal that rescued it from a pre-pack administration.
However, some of the landlords, including the owners of Manchester’s Trafford Centre and Edinburgh’s Fort Kinnaird retail park, challenged the agreement, arguing that it is unfair.
The case was heard via videoconference in March in front of High Court Judge Mr Justice Zacaroli.
He gave judgment today, rejecting the landlords’ arguments.
“Had the jurisdiction challenge been successful, it would have placed limits on the aggressive use of CVAs and shifted such compromises into the restructuring plan market,” said Doug Robertson, a restructuring and insolvency partner at law firm Irwin Mitchell.
“This decision retains the use of a CVA as a tool in complex, differential compromises and arrangements and is in line with increased emphasis on providing debtor protection to enable it to restructure its affairs with a view to financial recovery.”
Landlords are increasingly challenging retail CVAs, which they feel do not take enough account of their interests, even as the high street feels the pinch of the coronavirus pandemic.
The same judge recently heard a similar challenge brought by a group of landlords to failed hair salon operator Regis. Judgment in that case is expected soon.
And last week, a challenge brought by landlords against fitness chain Virgin Active’s CVA concluded. Judgment in that case is also expected soon.
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