The latest CVA by Arcadia is not the first nor the last CVA we are likely to see over the coming months or maybe even years with the way things are shaping up. However, it has once again brought to light the potential need for reform with this insolvency process.
It is no news that the landlords are most financially affected by the CVAs as the process is first and foremost aimed at cutting down the increasing rental liabilities. Lower levels of debt owed to the landlords, when compared with the non-landlord creditors leaves the landlords with a meaningless vote and having to bear the brunt of the CVA.
It is fair to say the CVA process has given many struggling entities a lifeline and saved thousands of jobs that were at stake but, equally, there is a feeling among the landlords that some entities are proceeding with a CVA with the sole intention of re-negotiating rents.
Is now the time to change the process and give landlords a more meaningful vote? Alternatively, to ensure that all retailers are trading on an equal footing, would it be better if Next's proposed CVA clause became market practice?
With the upcoming Conservative leader elections and the never ending uncertainty of Brexit, CVAs are clearly not on the Government's agenda, however, it is quite clear that something needs to change!