Overview
Mark Fennessy, partner at law firm McDermott Will & Emery, said:
“Over recent years, the use of CVAs to bind commercial landlords to lease compromises has attracted much publicity. The new restructuring plan offers a similar purpose. Both restructuring tools are subject to judicial safeguards (albeit, in the case of CVAs, only after a court challenge is commenced). Landlords have been left feeling bruised by the courts following the judgments handed down this week in New Look and Virgin Active. The Regis judgment offers them some very limited respite. The court provided some helpful guidance on where it is possible to justify applying a blanket discount to landlords’ claims in respect of future rent for voting purposes, and scrutinised the treatment of one of Regis’ creditors as “critical” (meaning its claim would be unimpaired), ultimately deciding it was not justified and amounted to unfair prejudice. In other material respects, however, the court followed its reasoning in New Look. This is not the end of the story by any stretch, with New Look subject to an appeal, and the Caffé Nero CVA subject to a challenge in the courts too.”
