KPMG warns retail CVAs could rocket
Bad weather conditions and low sales in January could see the insolvency process spike this year
A wave of Company Voluntary Arrangements is expected from retailers according
to KPMG as the country comes out of the recession.
CVAs are an administration process where debts and contracts are renegotiated
by an insolvency practitioner for a company. KPMG, which led the first listed
company CVA for Blacks Leisure, expects the number of theses insolvencies to
double in the coming year the
Financial
Times reported.
Brian Green, restructuring partner at KPMG, said: “We’ve proposed eight CVAs
in the past year and our current pipeline suggests we will propose double this
figure in 2010.”
“Cases such as JJB and Blacks Leisure, combined with insolvency regime
reform, has prompted many distressed retailers to consider a CVA,” he said.
CVAs have previously been criticised by landlords where rent contracts have
had to be renegotiated.
Mark Bowles, property director for HMV group told the
Financial
Times CVAs: “Don’t offer everybody a level playing field, and allowing firms
to be released from lease liabilities is an inappropriate way to manage the
situation.”
The British Property Federation, which represents landlords is to meet at a
retail summit today, to discuss CVAs.
Further reading:
Increase
in retail CVAs expected
KPMG
floats Blacks Leisure CVA plan
