// Rebel landlords rebuff New Look’s controversial CVA proposal
// Creditors will vote on new CVA deal on September 15
A group of New Look landlords have rejected the retailer’s controversial company voluntary arrangement rescue package which proposes moving the majority of its UK stores’ rent to a turnover basis.
Around ten landlords, including several big shopping centre owners, were reported by The Mail on Sunday as rebuffing the plan, which will be voted on by creditors in nine days’ time.
New Look has asked landlords across its 450-store portfolio to switch to turnover-linked rent contracts, offering other bonuses such as one-off payments and multiple lease breaks into the deal.
“If this fails, with no credible buyer emerging, the fallout is most likely liquidation,” said a source speaking to The Mail on Sunday about the proposals.
The rejections come after The British Property Federation criticised New Look for inaccuracies in its CVA proposal.
“While New Look and Deloitte engaged with us and this resulted in some changes to the proposal, this still fails to meet our best practice standards for CVAs and contains terms that property owners will object to.
“CVAs should not be about permanently ripping up leases – they are supposed to be a temporary measure, as part of a wider rescue plan, to get a business back onto its feet,” said British Property Federation chief executive Melanie Leech.
New Look’s proposal looks to categorise its leases, changing 402 leases to a turnover percentage of up to 12 per cent and the remaining 68 stores moving to nil rent.
It also includes enhanced landlord breaks for all stores, providing landlords with the opportunity to exit the lease if they believe they can identify an alternative tenant on improved terms.
Meanwhile, New Look will have no additional rights to exit the turnover-based rental agreements until the end of the CVA, and even then only in the event that the store is underperforming.
In contrast to most high street retailer CVAs, which usually include job cuts or store closures, New Look’s plan does not affect its 11,200-strong workforce nor does it suggest any sites will permanently shut down.
New Look said the CVA meeting date is scheduled for September 15 and approval requires a vote in favour by at least 75 per cent of unsecured creditors.