High Court Rejects New Look Landlords’ CVA Challenge in Landmark Decision

The decision confirms that company voluntary arrangements remain a flexible tool for restructuring leasehold portfolios.

Key Points:

The judge rejected each of the landlords’ arguments, confirming that:

..A CVA may provide for different outcomes for different groups of creditors.

..No rigid test exists for “basic fairness” that requires a landlord to receive at least market rent, or that contractual rent should be interfered with to the minimum extent necessary.

..If a landlord is entitled to terminate the lease and receive a better outcome than in the alternative, any automatic unfairness from changes to the terms of the lease is negated.

..Whether a CVA is unfairly prejudicial depends on all the circumstances of the case.

..The fact that the statutory majority to approve a CVA is achieved by the votes of unimpaired creditors or those who receive substantially different treatment is not necessarily unfairly prejudicial (though it is a highly relevant factor in considering unfair prejudice).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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