The British Property Federation (BPF) has welcomed a High Court ruling quashing a company voluntary arrangement (CVA) entered into by the owner of fashion chains Miss Sixty and Energie.

The court said there had been a “prima facie case of misconduct” after administrators were found to have unfairly sided with the retailer against their landlord Mourant, the owner of Liverpool’s Metquarter shopping centre.

Liz Peace, chief executive of the BPF, said: "This judgement is of huge significance because it shows that immoral acts designed to let directors manage retailers into the ground, blame the landlord and then walk away will not be tolerated by the courts. Common sense has won out and this will hopefully make future cases of firms cynically using insolvency laws less likely."

The ruling has been dubbed “the son of Powerhouse” by legal experts, in a reference to the 2007 landmark legal case where electrical retailer Powerhouse’s parent PRG Group was told that its use of a CVA to escape the lease liabilities of the now defunct subsidiary was “unfairly prejudicial” to landlords.

Quashing the CVA on the grounds that “guarantee stripping” in the CVA had unfairly prejudiced the landlord, Mr Justice Henderson said that there had been a “prima facie case of misconduct” on the part of Sixty UK’s joint administrators Peter Hollis and Nicholas O’Reilly, that should be considered by professional bodies.

Mr Justice Henderson said: “Unfortunately, the administrators in the present case seem to have lost a proper sense of objectivity, and they allowed themselves to side with Sixty group against the interests of the guaranteed landlords of the closed stores.

“They permitted Sixty SpA to dictate the crucial terms of the CVA, and they misrepresented the true position to the creditors.

“It is only thanks to the persistence of the applicants and their legal advisers that this regrettable state of affairs has come to light.”

Ian Fletcher, director of policy at the BPF, added: ““The judge’s remarks say it all. It is extremely disappointing that landlords are seen as such soft targets and have to go to such hassle and expense to defend their interests in court. Such a damning judgement can only further erode confidence in the insolvency practitioner sector’s ability to self-regulate itself. Over the course of the recession landlords have shown a willingness to support legitimate rescues and what a pity they will be more suspicious in future because of cases like this.”

The dispute centered on a rental guarantee that Mourant had been given by Sixty UK’s Italian parent company, Sixty SPA, over the leases of Miss Sixty and Energie stores at the shopping centre.

Under the terms of the CVA proposed by Sixty UK last April, Mourant lost the guarantee in return for just £300,000. If the company had instead gone into liquidation, then the guarantor’s obligations under the lease would have continued.