"We hope the open and honest manner under which CVA was worked up can become a benchmark for any future agreements. It is vital we have tougher rules around insolvency practice that protect landlords and their own investors and shareholders, as well as ensuring a fair procedure exists to keep firms in business."
The BPF called for stricter controls on the way insolvencies were managed the day when leading property owners praised the handling of JJB Sports’ bid for a company voluntary agreement (CVA).
The sportswear retailer has finalised the terms of a CVA which was passed by creditors. JJB has closed about 140 stores while changing lease terms for around 250 remaining ones, allowing for rent to be paid monthly.
Property firms involved in the meeting included British Land, Hammerson, Land Securities, and Prupim. They have praised JJB and their advisors KMPG for the open and honest manner in which proceedings were carried out. They are calling for greater controls on the insolvency process to prevent firms using administrators to threaten suppliers when a firm is not on the verge of collapse.
Landlords felt unfairly criticised over the collapse of Stylo, and insist that in refusing that CVA they were acting to protect the interests of their investors and shareholders which include an array of pension and life funds.
Peter Best, head of UK asset management at Prupim, said: "CVAs should not be used to impose unreasonable terms on landlords or any other creditors and they should not be used to break the terms of existing lease documents across a portfolio. Property owners often feel that insolvency practitioners are playing landlords off against each other, but in this case KPMG must be commended for the way they have dealt with things."
Francis Salway, chief executive of Land Securities and president of the BPF, said: "A CVA designed to assist with the survival of a business that would otherwise fail would generally be welcomed by landlords. It is clearly in our interests for our tenants to survive, thus reducing any potential exposure to empty rates. However, we need to ensure that such practices are only entered into when a firm is at the point of insolvency and not before."
Peace said: "We are concerned that some insolvency practitioners are using CVAs not just to threaten suppliers into ripping up contracts but also as cash cows to make large sums of money from other people’s misery. The BPF wants to see some safeguards on this matter which would ultimately serve to reduce costs for all concerned and hopefully ensure the survival of more businesses."
Rupert Clarke, BPF vice president and chief executive of Hermes, said: "No one wants to see a firm go under, but we need to be aware that there are always two sides and that most leading retail landlords are invested in by the public at large. Clearly landlords have been taking great pains to support their tenants with numerous measures including monthly rents and service charge cuts, but the CVA process remains a complex one and it should not be used as a weapon to blame landlords for the failure of another business."
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