This time a week ago, there remained optimism among some in the retail community that it might still go ahead. But a few phone calls to landlords soon made it clear that initial optimism had been replaced by dismissal as it came to the crunch.
The vote went against Stylo for a number of reasons which were perfectly legitimate from the landlords’ point of view, and retailers considering the same might want to take note.
First and foremost, when landlords began to think about all the implications of accepting the company voluntary arrangement, it became clear that in the hierarchy of retailers’ creditors, landlords would become, as one put it to me, “no better than a small supplier.” So what on first glance might have seemed like a much better alternative to pre-packs is in fact not much more preferable to landlords.
Ziff is still aiming to keep the best of Stylo’s portfolio and get rid of the rest, while in effect asking for landlords to subsidise the rest of the creditors.
Accepting a massively reduced rent income only to face losing the retailer as a tenant anyway in a few months time was never something landlords were likely to leap at.
Of course it’s partly understandable that retailers might feel that this kind of approach might work, taking the view that for landlords, anything is preferable to having a void – even having a retailer that is not paying rent.
But some felt the CVA was nothing more than a pre-pack in CVA clothing and, as a result it went down like a lead balloon.
Landlords were worried about setting a dangerous precedent. Rumours abound that another well-known retailer is considering making a similar offer, but it is likely that the precedent for landlords rejecting such CVAs might just have been set.
The property industry has sent a clear message to struggling retailers – that CVAs are not going to be an easy way out.