The British Property Federation (BPF) has taken a swipe at Next after the retailer requested the implementation of a so-called ‘CVA clause’.
The fashion behemoth, led by Lord Wolfson, said it will ask landlords for lower rent on stores when neighbouring shops get a better deal through a CVA.
BPF director of real estate policy Ian Fletcher said the retailer’s demand illustrates “how far the CVA process is at risk of being misunderstood or misused”.
“It’s nonsense to suggest that a process designed to try to keep a sinking ship afloat should be applied to healthy businesses.
“Also, where does this end? A CVA often allows a business to cut what it pays in business rates or renegotiate the terms agreed by its banks. Will Next also seek these concessions?” he asked.
Fletcher added that requests such as this by Next “undermine” the CVA process, “which was set up to ensure businesses facing insolvency have a chance of survival and do not disappear from our high streets”.
The BPF showed support for Carpetright’s CVA but criticised House of Fraser, claiming the department store retailer handled the process in an “insensitive” way by failing to discuss plans with landlords beforehand.
Read more: Does the CVA need a restructure of its own?