Hair salon chain Regis’s company voluntary arrangement (CVA) was revoked on 17 May in a hearing that considered several arguments put forward by a number of landlords. The judge found that one of the creditors had been incorrectly categorised by the nominees as critical, and that this treatment unfairly prejudiced the landlords. On that ground alone, the court revoked the CVA, but the court rejected all of the landlords’ other arguments, which were similar to those presented in the challenge to New Look’s CVA.
Property owners will be reassured to see that the courts are prepared to closely scrutinise the decisions taken by nominees. In truth however, this isn’t a victory for landlords as a class of creditor. The CVA deck remains firmly stacked against landlords, and this revocation represents a win on a technicality rather than the start of a shift in the balance of power.
It is interesting to see the courts revoke the CVA on the grounds of unfair prejudice, however, as this is one of the first times we’ve seen such a challenge succeed. This is more a reflection of the peculiarities of the Regis CVA, where one creditor had wrongly been treated as critical, than the start of a wave of successful challenges. Landlords should avoid getting too excited
The landlords made the usual arguments to challenge a CVA, including the lack of weighting given to their votes, but the court rejected them once again. Aside from the faintest glimmer of good news, it is unfortunately business as usual for landlords. When it comes to revoking CVAs, the floodgates look set to remain firmly shut.
Given the judgments we’ve seen over the past year, a win in the landlord column stands out in the sector, but does little to balance the scales. One ray of sunshine isn’t enough to pierce the storm clouds still hanging over the heads of UK commercial property owners.