The Speciality Retail Group (SRG) company voluntary arrangement (CVA) today passed through the 28-day challenge.
SRG creditors voted in favour of passing the CVA proposal, with 98% voting to support the CVA, last month. Once the creditors’ meeting has taken place, there is a further 28-day cooling off period to give creditors another chance to object.
Some 75% of creditors had to approve the CVA in order for it to succeed. The terms of the CVA were deemed more favourable than previous retail CVAs with SRG not wanting to close any Suits You stores immediately, unlike the CVAs conducted by JJB Sports and Blacks Leisure last year.
Richard Fleming, supervisor of the CVA and UK head of restructuring at KPMG, said: “Despite the public criticism of company voluntary arrangements by the landlord community, the Suits You CVA, having been unchallenged in the 28-day period, now comes into force. To ensure the collaborative approach of previous CVAs is sustained, we worked with the landlords of SRG’s loss-making stores to ensure the terms of the CVA met their needs, while protecting the profitable part of the business from certain administration.”
The struggling 71-store retail group proposed the CVA in order to shed 42 loss-making Suits You stores as part of a restructure to save it from collapse.
Landlords of the 42 stores have accepted 60% of the full rent for 18 months - equivalent to 11 months’ rent - during which time the stores will continue trading.
Fleming added: “The March rent quarter date may well prove to be the nail in the coffin for retailers who have not traded well over the past few months. Make no mistake that administration leaves casualties on both sides, with landlords appearing well down the food chain in the creditor group. Working together with tenants offers a much more constructive path for all concerned, not least the employees. Indeed a successful CVA, usually part of a wider turnaround programme, has been proven to change the fortunes of a company in a short time frame.”