House of Fraser landlords are not taking the recent Company Voluntary Arrangement (CVA) lying down. After the approval of the troubled retailer’s rescue plan, which includes the closure of 31 stores, more than half of its total estate, landlords have voiced their discontent and are gearing up for legal action. They argue that they have been unfairly treated throughout the process, with their interests being sidelined in favor of equity shareholders.
Despite House of Fraser denying any wrongdoing and pledging to defend its position vigorously in court, the rift between the landlords and the retailer remains wide. The landlords, supported by their advisors, maintain that alternative solutions could have been explored to rescue the business without disproportionately burdening them.
A statement released by the landlord’s advisors highlights their concern regarding the negative impact of the CVA process on landlords, emphasizing that the primary goal should be the business’s rescue, not the disadvantage of creditors. Their accusation of House of Fraser and its advisors failing to strike a fair balance is at the core of the dispute.
The divisive use of CVAs by retailers in the UK has put landlords on edge, fearing that they may be unfairly targeted. The House of Fraser case, in particular, has stoked anger due to landlords’ diminished voting power and the disproportionate burden they are bearing. This resentment has been compounded by news of a substantial cash injection for the retailer from its new majority owner, intensifying the landlords’ grievances.
One of the key concerns raised by landlords is the challenge of filling the significant retail spaces left vacant by department store closures like those of House of Fraser. While smaller units can be easier to re-let, the large footprints of department stores present a daunting task in finding new tenants. The aftermath of the BHS closures serves as a stark reminder of the complexities involved in repurposing such expansive retail spaces.
Determined to ensure fair treatment in future CVA situations involving struggling retailers, the House of Fraser landlords are resolute in their pursuit of legal action. Their efforts seek to hold companies and their advisors accountable for their decisions and to prevent the exploitation of landlords in similar scenarios. As the legal battle unfolds, the outcome will not only determine the fate of House of Fraser but also establish a precedent for how landlords are treated in the retail industry.
For more in-depth insights into the challenges facing landlords in the retail sector, you can check out these useful links: Financial Times Article and Property Week Report.
