July 29th, 2019 / Insight posted in Articles

A helping hand for landlords facing a CVA

Commercial landlords on the receiving end of a company voluntary arrangement (CVA) need to be aware of the implications of the terms proposed by a tenant. Insolvent businesses proposing a CVA can close underperforming stores and negotiate rent reductions, which clearly directly affects landlords.

If you are a landlord finding yourself in this situation, there are steps you can take to mitigate the impact on your own bottom line. We recommend you seek immediate advice from experts who know the specific complexities of CVAs concerning landlords.

Depending on your original tenancy agreement, you might be able to take action against your tenant to recover possession of the premises before the CVA is approved. However, more usually, you will need to do the following:

  • Act promptly. A company proposing a CVA need only give creditors 14 days’ notice of the meeting where creditors will consider and vote on the proposal.
  • Decide whether to regain control of your property. The implementation of a CVA is a ground for forfeiture in many leases.
  • Identify other similarly affected landlords you could collaborate with, to reject or seek modifications to your tenant’s proposals.
  • Be prepared to submit expert evidence to quantify the value of claims in the CVA. This will increase your voting strength and maximise your own ascertainable claim.
  • Analyse the impact of the CVA against alternative insolvency regimes. It might be that other options are more beneficial to you, which may affect your voting decision.

Landlords’ responses to CVAs will differ from proposal to proposal. To get the best protection and outcome, you should participate in the approval process for the CVA and fully exercise your rights to make representations and vote.

Here to help

Our insolvency practitioners and property specialists will seamlessly work together to find the best solution for your situation. For more information about your individual situation, contact our insolvency or property teams.