The news concerning the troubles being experienced by the likes of Debenhams and Monsoon Accessorise casts a further pall over the high street on what is a changing landscape for the world of retail property and restaurant chains.  No longer can owners of shopping centres rely on having one or two key anchor tenants as a bulwark to maintain the value of their investments.  Recent history has shown that even the most blue chip of retailers is vulnerable when they struggle with the need to reduce costs in order to compete with more nimble retailers such as those who trade on-line with little in the way of high street presence, without the burden of business rates and high overhead costs.  As a result we have seen the likes of Mothercare as well as Jamie’s Italian, Byron and Giraffe employing the procedure of entering into company voluntary arrangements (CVA) in order to force landlords to accept reduced rents or, for badly forming sites, to accept surrenders of leases on the basis that getting some return is better than the risk of getting nothing in the event that their tenant goes into liquidation.

CVAs are created under the provisions of the Insolvency Act as a means of permitting a company to present a scheme for approval by creditors.  This provides creditors with the opportunity to vote on the strategy for the company to re-organise its business with the aim of keeping and running the valuable parts of the business whilst taking steps to cut out the loss making elements of the concern.  For creditors, it is often the case of making the best of a potentially poor deal – the thinking being that something is better than nothing. However CVAs are now becoming more commonplace and there is some criticism that directors are keen to go down this route for reasons unconnected with saving the business – possibly so that they can avoid the harsh glare of an investigation by a liquidator who can look closely into their activities which might have been the cause or a contributory factor in the company’s decline.  It is worth noting that supervisors in a CVA and, indeed administrators in the administration of a company, do not share quite the same robust investigative powers as a liquidator.