The British Property Federation has called on the government to conduct an urgent review of company voluntary arrangement processes, among concerns they are being “misused”.
Department store House of Fraser is the latest retailer to join the growing ranks opting for the controversial insolvency procedure. If approved, 31 stores will close including its Oxford Street flagship.
The BPF has said the process “risks undermining the UK’s global reputation and deterring much-needed investment into our town and city centres at a time when it is arguably more important than ever that the UK demonstrates it is open for business”.
The BPF’s concerns
The BPF outlined its “frustration” regarding three issues:
■ Lack of transparency
■ Unfair discrimination between different creditors
■ The lack of regulation to ensure CVAs are used appropriately and to drive good practice
What it recommends
The non-profit organisation recommends the following steps to “restore confidence” while it awaits a response from the government:
■ CVAs affecting more than five outlets are referred to an independent third party for review. The Pre-Pack Pool could perform such a function.
■ The Insolvency Profession and the BPF work together to codify what is good practice in terms of voting rights and voting structures for CVAs.
■ Insolvency professionals follow BPF best practice guidance on engagement with property owners as early as possible in the CVA process.
Melanie Leech, chief executive of the BPF, said: “The CVA process is intended to be part of a comprehensive business recovery plan.
“Property owners looking after savers’ and pensioners’ money will support businesses that demonstrate this commitment but must protect those pensioners against unfair action that penalises their interests.
“Urgent action is required and we are calling on government today to undertake a review, so that we can restore the CVA process to its original purpose.”
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