Select’s plans for its third CVA are “deplorable”, the BPF has said.
The retailer has provided no end date to this latest process, in which it is proposing to pay no rent for 49 of its 157 stores affected by the CVA.
The total claim of non-critical creditors in Select’s CVA, which excludes property owners, is just over £19m, including £6.5m to local authorities.
However, under the plans these creditors will only receive £975,845 (5%) of the monies owned.
Select is also looking to give itself the right to break leases early – including those that have benefited from rental discounts – and restrict landlords’ rights to break leases. This would prevent them from being able to find new tenants, the BPF said.
Melanie Leech, chief executive of the British Property Federation, said: “This is Select’s third CVA in as many years, with the second one terminating early when they failed to meet the obligations of the proposal. It is deplorable that the business is now again attempting to exploit the CVA process by proposing to pay no rent for many of its stores and, in giving little indication of how long the CVA will actually last, failing to produce a credible rescue plan.”
“To suggest that the business should be given new rights to break leases on stores that have benefited from rental discounts is outrageous. This is opportunistic and simply asking property owners to absorb significant losses with no commitment that this investment will be worthwhile.
“Select has also failed to treat property owners as economic partners – any CVA proposal should come to the BPF’s Insolvency Committee to provide opportunity for a constructive conversation about a business’s future.
“We understand the challenges facing the retail, hospitality and leisure businesses on our high streets, which are at the sharp end of the Covid-19 pandemic. CVAs, however, must not unfairly compromise property owners, who need to take into consideration the impact on their investors, including the millions of people whose savings and pensions are invested in commercial property. We expect that directly affected property owners will find these proposals unacceptable.”
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