New Look faces High Court battle with landlords over rents
UK fashion retailer New Look is set to come face to face with its major landlords in a High Court battle over its rent restructuring plans.
Observers say the outcome could have major ramifications for the survival of embattled retailers and, in turn, the future of UK high streets.
British Land and Land Securities are among four landlords challenging the retailer over its Company Voluntary Arrangement (CVA), which helped switch New Look stores to turnover-linked rents last year, The Times reported.
Under the CVA terms, property owners must accept no rent for three years on 68 stores and just 2% of turnover on 402 others. The retailer argued that the restructuring was essential for its survival.
However, landlords argue that a “bare minimum market rent” should be paid, but would not be under the terms of the restructuring.
Landlords claim the switch to turnover rent “fundamentally rewrites” leasing agreements, a switch to payment in arrears is “unfair”, and the period of rent reductions is “excessive”.
Doug Robertson, of the law firm Irwin Mitchell, told The Times: “The implications are profound. If current use of CVAs was found to contravene the law it could undermine the viability of some of the chains left on the high street or lead to further administrations and potentially well-known names disappearing”.
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