// CVAs are delaying “failure” according to Colliers International
// Since 2016, 13 out of 23 large businesses to have launched CVAs have gone on to file for administration
// Some of the most notable retailers to have collapsed after launching a CVA include BHS, Toys R Us, and Mothercare
CVAs are prolonging “inevitable future failure” rather than helping retailers secure longer-term futures, new research has suggested.
Since 2016, 13 out of 23 large businesses to have launched CVAs have gone on to file for administration, according to research by property advisory firm Colliers International.
Over the past year, a number of embattled retailers have resorted to CVAs as they seek rent cuts and renegotiate debts with other creditors.
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“CVAs were designed to help struggling businesses, but they do nothing to address high debt levels, which often require restructuring, refinancing or a debt write-off,” Colliers co-head of retail agency David Fox said.
“For many brands, the CVA fails. It is clearly not a mechanism that can be guaranteed to deliver a long-term viable solution.
“It merely just delays the inevitable future failure and pushes out the problems for the next couple of years, creating even more polarisation in the marketplace.”
Some of the most notable retailers to have collapsed after launching a CVA include BHS, Toys R Us, and Mothercare.
Meanwhile, Sir Philip Green’s Arcadia Group had to put its CVA plan to a second vote after landlords rebelled against the proposals.
Debenhams’ CVA was challenged through the courts by one of its landlords as property owners ramp up the pressure on struggling retailers.
Nevertheless, landlords such as Westfield, Hammerson and Intu have all blamed CVAs and store closures for rising vacancy rates across their shopping centres, which have fallen in value over the past few years.
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