Suits You owner Speciality Retail Group’s proposed company voluntary arrangement is expected to be backed by landlords as the retailer attempts to offer more amenable terms than previous CVAs.
The struggling 71-store retailer wants to exit 42 loss-making stores as part of a restructure to save it from collapse, revealed by RW Online last Thursday, but is not proposing to close any immediately, unlike the CVAs conducted by JJB Sports and Blacks Leisure last year.
Instead, landlords of the 42 stores will be offered 60% of the full rent for 18 months - equivalent to 11 months rent - during which time the stores will continue trading.
Russell Loveland, Lend Lease’s senior asset manager, which has one affected store in Bluewater, said that SRG does seem to have “learned some of the lessons from previous CVAs”.
Loveland added that although the CVA in general was “disappointing”, it is a “welcome alternative to administration”. He added: “I suspect it will probably be successful.”
If landlords of affected stores want to take on new tenants during the 18-month period they must give SRG 45 days’ notice.
One landlord with exposure to the CVA said: “The terms are better than Blacks. If I was a betting man I’d say it will go through.”
Richard Fleming, UK head of restructuring at KPMG, which has been appointed by SRG to oversee the process, said the terms of the CVA offers landlords “more flexibility and, indeed, is more generous than previous proposals”.
SRG chairman and chief executive Peter Lucas said he is trying to turn Suits You into a “profitable concern”. He said: “We believe that the Suits You format can successfully trade with only limited high street exposure.”
For the CVA to pass, 75% of creditors must vote in favour. All votes have to be in on February 23.
According to a report by the Local Data Company this week, town centre vacancies have risen from nearly 10% for the first half of 2009 to more than 12% by the end of the year.