Clarks, the iconic shoemaker / retailer proposed a Company Voluntary Arrangement (CVA) last week, but landlords are not happy with the terms which will state that their rents will be based on turnover. Around third of their shops will be on zero rent and any arrears accrued during the pandemic will be written off.
Clarks are being accused by their landlords of proposing a CVA which they could never complete. Being the only creditors, landlords would expect to be able to vote on the CVA, however they only account for 25% and to challenge a CVA creditors need 75% of votes.
For the period ended 2 February 2019, dividends of £100m were paid out to the Clarks’ shareholders. This has caused consternation with the landlords as they are now being told / asked to share a large proportion of the losses.
The recent terms of CVAs is a worrying trend for landlords who stand to lose a lot of revenue should the CVA be passed.