A Company Voluntary Arrangement (CVA) is a process used by a company that has concerns regarding its debts to come to an alternative arrangement with its creditors, to allow settlement of its liabilities at less than the full amount due.

CVAs are set up by the company, working together with an Insolvency Practitioner, to put forward proposals to the company’s creditors. The creditors consider these proposals and must vote on whether or not to approve the CVA. If approval is given by at least 75% of the company’s creditors, the CVA is then binding on all creditors.

Numerous articles in the recent weeks in both the mainstream and the specialist retail press report discontent amongst the landlord community as to whether or not tenants are seeking to use CVAs improperly to push landlords into cutting rental charges.

A landlord is typically the largest, and therefore the most significant unsecured creditor of a business. This can mean that they bear the brunt of any reduction in a tenant’s debt levels. We have been made aware of a report that one particular retailer intends to insert a “CVA clause” into its lease agreements if a landlord has already agreed that another tenant may receive a reduction under a CVA.

If you are a landlord facing a situation where one of your tenants has proposed a CVA, we have the expertise to assist.