作者
Nick Moser

Nick Moser

合伙人

Read More
作者
Nick Moser

Nick Moser

合伙人

Read More

2019年12月2日

Debenhams CVA challenge considerations

Background

Some landlords of Debenhams Retail Limited stores challenged the proposed Company Voluntary Arrangement (CVA) on several grounds including that a CVA cannot reduce rent owed to a landlord as CVAs only apply to debts and future rent is not a debt because it has not yet fallen due.

They also argued that a CVA cannot remove the right of entering into the property (a right of re-entry) if the tenant fails to pay rent, claiming that a CVA cannot remove or change rights in property.

Decision

The term "debt" includes monetary liabilities that might exist from a legal relationship. Future rent may not be a present debt, but it is potentially likely to arise as a debt in the future, owed to the landlord. The Judge held that future rent was a type of debt and could be compromised by CVAs.

However, the Judge did agree with the landlords that a CVA cannot vary a right of re-entry. The right of re-entry exists independently from a debt. It exists because of the landlord and tenant's relationship. A CVA can modify monetary obligations under a lease which, if breached, allow the landlord to enter the property. CVAs cannot change the right of re-entry itself.

The CVA was modified to preserve the landlord's right of re-entry.

Discovery (Northampton) Ltd v Debenhams Retail Ltd [2019] EWHC 2441 (Ch)

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