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Landlords are reportedly accusing Clarks of abusing its insolvency processes, as the retailer pushes forward with a CVA that includes turnover-based and zero rental terms.
According to a report by The Sunday Times, Clarks’ proposed CVA is “likely” to detrimentally impact landlords, who account for less than 25% of creditor votes.
In order for the CVA to be approved, some 75% of creditors must vote in favour of its terms.
Launched last week after Clarks completed a £100m rescue deal with private equity firm LionRock Capital, the CVA would result in most of the retailer’s 320 stores in the UK transitioning to turnover-based rent.
Furthermore, another 60 stores will move to zero rent and will not be obliged to pay any outstanding rent.
LionRock’s investment in Clarks will see the Hong Kong-based firm acquire a majority stake in the shoe retailer, with the founding Clarks family receiving a minority stake.
It is estimated Clarks’ landlords have debts totalling £160 and were at risk of more if they continued to absorb unpaid rent.
Melanie Leech, chief executive of the British Property Federation, said: “This abuse of CVAs forces property owners to absorb significant losses with little attempt to build a recovery strategy they can support as economic partners.”
Retail Sector has reached out to Clarks for comment.
