Real Estate Review

    View Authors February 2011

    LANDLORDS REJOICE AS HIGH COURT OVERTURNS “UNFAIR” CVA

    The past two years have seen a marked increase in the use of the Company Voluntary Arrangement by retailers to reduce their lease liabilities and win the release of onerous parent company guarantees. Several well-known high street names have gone through the process. CVAs have received cautious support from landlords but real concern continues to be voiced regarding the practice of “guarantee stripping”.

    In a recent decision, the High Court set the boundaries on acceptable practice in this area and provided some comfort to landlords that they will not be bulldozed into accepting unpalatable proposals, simply because they are a minority voice in the proceedings. In this Review, we consider the implications of the High Court’s judgement.