Major landlords voted against House of Fraser CVA

House of Fraser’s CVA is understood to have been voted against by major landlords like British Land and Derwent as tensions continue to rise between the two parties.

The embattled department store saw its CVA approved by creditors last month, but new documents seen by City AM have revealed that some of its biggest landlords opposed the insolvency process.

Despite the opposition from property owners, which also included the Reuben Brothers’ Aldersgate Investments, shopping centre giants Intu and Hammerson voted in favour of the CVA.

Under the terms of the House of Fraser’s CVA, which has proven to be one of the most contentious this year, its landlords’ claims to voting were discounted 75 per cent, minimising the impact of their opposition.

This is common practice in this particular insolvency process, granting the supervisor powers to decide on voting rights of creditors at their discretion.

Prior to voting to approve the CVA, which is to see 31 of the department stores 59 stores shut, a dozen landlords held talks with law firm Bryan Cave Leighton Paisner about a possible block of the CVA.

The law firm reportedly told landlords that had a “very strong case” on the basis that they were being treated unequally compared to other creditors – such as banks, bondholders and shareholders.

“Had the CVA not been proposed is was very likely the company would have gone into administration,” said a spokesperson for KPMG, which supervised the process.

“As key creditors, landlords had a significant vote in the House of Fraser process. Indeed, had all landlords voted against the proposals, then they would not have gone ahead.

“The law dictates that votes in a CVA are based on the value of a creditor’s claim. A landlord’s claim is technically ‘unascertained’ as it relates to future rather than current liabilities.

“The Insolvency Rules actually dictate that ‘unascertained claims’ should be valued at £1 for voting purposes but in practice, and as was the case here, the market has always taken a more generous calculation approach.

“Moreover, it remains that those landlords whose claims are compromised by the CVA have the right to take back their stores.”

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