Landlords' body welcomes JJB CVA

KPMG’S PROPOSED company voluntary arrangement (CVA) at retailer JJB Sports has been welcomed by the British Property Federation.

The trade body is happy with the proposed “clawback” proposal which will see landlords share in any future financial success at the struggling company.

The CVA offers renters between £2.5m and £7.5m in shares or cash if JJB’s market performance increases by 2013.

Richard Fleming, partner at KPMG and proposed supervisor of the CVA, said creditors are likely to receive 24.6p on every pound owed through a CVA, compared to 1.1p in an administration.

JJB plans to exit 43 unprofitable stores by April 2012 and possibly a further 46 if they are unsuccessful by April 2013. The pitch is also requesting a 55% reduction in rental payments and for all properties to be paid on a monthly not quarterly basis.

CVAs usually repay a portion of debt owed to creditors – including landlords – over a period of time, while allowing the business to continue trading. A CVA must be voted for by 75% or more, by value, of creditors to be pushed

Liz Peace, chief executive of the British Property Federation, said: “JJB’s offer to give landlords a share of its future profits shows it has listened to our concerns, but whether the sums proposed – up to £7.5m across 90 stores – are sufficient to sway landlords’ votes remains to be seen.

“Landlords and their shareholders – many of whom invest on behalf of pensioners – lose out through every CVA. These “clawback” clauses should therefore be included in almost all CVAs as a matter of course.

“However, it must be remembered that this is JJB’s second bite of the cherry. JJB disposed of 140 stores through its last CVA two years ago, and so any creditor will be seeking reassurance that this is a lasting solution to the company’s problems.”

JJB entered into a CVA in April 2009 with the agreement closing 140 stores.

In January it was suggested that rival JD Sports was interested in buying the business.

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