High Court gives Virgin Active CVA green light in further blow for landlords
Landlords have lost their legal challenge against Virgin Active’s restructuring plan, in the second high profile defeat for commercial property owners this week.
Today’s High Court judgement will come as a further blow to landlords hoping to challenge tenants over Company Voluntary Arrangements.
It comes after the court gave New Look the green light to press ahead with its restructuring plan earlier this week following legal action from its landlords.
The Virgin Active CVA proposals include plans to terminate the leases of some poorly performing gyms and to pay less rent on other properties.
The British Property Federation said the latest judgement “sets a dangerous precedent”.
BPF chief executive Melanie Leech said it “demonstrates how the law is now allowing wealthy individuals and private equity backers to extract value from their businesses in good times but later claim insolvency, as simply a means to get out of their contractual obligations with property owners.”
“This is fundamentally inequitable and the Government should not allow it to continue.
However Will Wright, head of restructuring at Interpath Advisory, formerly part of KPMG, said the rulings will provide “reassurance” to businesses.
“As lockdown restrictions ease and businesses start to rebuild, the situation for many organisations remains perilous,” he said.
“Yes, there will be something of a bounce as consumers flock back to shops, gyms and restaurants – but uncertainty remains around how long any bounce will last.
“And with Government support packages set to unwind, and liabilities needing to be repaid, the old adage that more businesses fail coming out of a recession than do going into it has never felt more pressing.
“Against this backdrop, this week’s rulings will provide a degree of reassurance that there remains a full canvas of rescue options available to those multi-locational businesses who require support.”