Rebel landlord appeals Debenhams’ CVA decision

7270
Rebel landlord appeals Debenhams CVA decision
A Debenhams landlord strikes back against expected CVAs.
// A Debenhams landlord has contested a judge’s ruling to allow store closures to go ahead
// Combined Property Control Group has appealed the controversial company voluntary arrangement made by Debenhams in September
// Store closures are set to begin in January, with 50 of Debenhams’ 166 stores slated to shut

A Debenhams landlord has hit back against a judge’s ruling to close stores.

In September Combined Property Control Group (CPC) challenged Debenhams’ controversial company voluntary arrangement (CVA).


READ MORE: Debenhams seeks advice from Deloitte amid CVA court challenge


CPC owns six properties let by Debenhams and claimed it was being treated unfairly as Debenhams’ creditor.

Mr Justice Norris rejected a challenge to the CVA, allowing Debenhams to continue with closing 50 of its 166 stores and secure rent cuts on others.

However, according to a report by the Telegraph, CPC has now challenged the judge’s ruling and appealed the decision.

A hearing is expected to take place at the end of January.

Sports Direct backed the original legal battle in September and was criticised by the judge for attempting to detail Debenhams’ rescue plan.

With Debenhams now owned by lenders and Sports Direct no longer holding a stake in the business, it’s unclear if Ashley is bankrolling the appeal.

Sports Direct had been Debenhams’ largest shareholder and attempted to gain control of the department store chain for months.

In April, lenders took control of Debenhams after it rejected a rescue offer from Sports Direct to inject £200 million into the business.

Sports Direct’s shares were wiped out in the process, as well as other shareholders.

Ashley had spent an estimated £150 million on his stake in the retailer.

Meanwhile, most of Debenhams’ UK stores are expected to stay open until after Christmas.

By January it will shut down 50 stores and rent reductions or lease negotiations on a further 105 stores will have been sought.

Click here to sign up to Retail Gazette’s free daily email newsletter

13 COMMENTS

  1. Well that property obviously isn’t worth the rent it’s being charged if they can’t make enough money to stay open! Rent and rates are the biggest con going. Surely they should be variable based on revenue or something? Live and die together.

  2. What most people forget is the owners of these shops have possibly paid fortunes for the property and have huge borrowings , the rent covers their interest payments and hopefully a SMALL profit on top , reduce rents or let tenants out of there leases can bankrupt property owners .

  3. Have offered landlords including Intu of some HOF stores and Debenhams long lease at passing rent for a new retail project but very few interested so maybe they are happy to have them empty

  4. Good luck with seeking a review. At the end of the day the required 75 per cent or higher was obtained to go ahead with the CVA which is a quick form of insolvency. Once that happens the lease and any historical legacy obligations end.

    This means all parties are bound by the current lease ending and likewise those landlords required to take a rent cut are no longer bound to continue with the lease and can give the required notice as little as one month in some cases if they are able to obtain a full rent paying tenant.

    With department stores, the model is dated, is a legacy model and has been left behind by retail changes with the move to regional shopping centres and further regional locations. Small towns will not keep a department store in this day and age not even an M and S unless it has the demographics and the income.

    Better to take the hit and either – remodel the property for residential and leisure and some retail or offices where office conversion have left some places short of office accommodation in town centres or to sell the property on.

    I cannot see this landlord winning the case no matter that Mr Ashcroft is funding the challenge.

  5. Good luck with that challenge. The CVA has been done legally and voted on by the majority of landlords. There are winner’s and losers as a result.

    I cannot understand why Ashcroft is bankrolling this given that he has problems with H of F which remains in administration and is likely to be left with a much smaller Fraser’s format which is the likely name for any future H of F store than it currently has.

    Many of these stores are dated and lack investment in small towns that no longer meet the needs of shoppers. Debenhams is also dire as a retailer. I cannot think of the last time I shopped there it’s at least the 90’s and many of the closing stores look the same now as then.

    Any landlord with any sense will either sell the property on or better still get planning permission for alternative uses – residential above or town centre quality office space and leisure – gym, cinema and some small retail – mixed use is the way forward with even hotel operator’s then sell the property on with planning permission.

    Retail has changed. Department stores are dying and survive in only regional shopping centres and or super malls and the big cities. Even JL have no plans for any store openings either JL or Waitrose.

    My feeling is the landlord will lose. Those landlords that have taken CVA process and rent cuts have usually been able to terminate the lease with the minimum of notice once they have found a replacement tenant willing and able to pay full rent. This has happened with many fashion retailer’s so the CVA process works both ways.

LEAVE A REPLY

Please enter your comment!
Please enter your name here