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Saturday, 12 February 2011

JJB Sports seeking CVA

It has been reported by The Telegraph that JJB Sports is proposing a company voluntary arrangement (CVA), which would mean that it will close 45 loss making stores to try and save the company.

JJB Sports last entered a CVA in April 2009, which allowed it to continue trading after walking away from leases on 140 stores.

CVA's have angered landlords as they dislike the fact that it means that the retailer can walk away from leases which underpin the value of their properties. However, the landlords would still receive a percentage in the pound of any rent that was outstanding and of course they can always relet the property! However in some cases the CVA mechanism has been used not primarily for saving the company but for terminating lease agreements on unprofitable stores and the landlords have been rightly upset. 

In order for the CVA to be approved 75% (by value) of the creditors must agree to the proposal so the support of their landlords is seen as crucial. However in last ditch efforts by the company it has reportedly said that if a CVA is not approved then the business will have to go into adminstration. If that were to happen then the return to unsecured creditors would be no doubt less than if it went into a CVA.

This latest move follows months of falling sales and a recent bid to raise £31.5m from its two largest shareholders. It has also been targeted by JD Sports which is looking to aquire the company.

If you are affected by the proposals as an employee then please look at our help for employees page.

If you are a retailer and would like to know how a CVA could save your business then take a look at our pages for retailers.

1 comment :

  1. Well, it could be a nice move of JJB sports in order to help their self save from greater problems that may come later. Only that, they don't make their landlords happy because of their moves.

    I just hope the best for the both parties will do fine. However, it is still good to have a win-win solutions.

    ReplyDelete

Many thanks for your comments. If you have a private business problem and you want advice give us a call on 0800 9700 539 or email me at keiths@companyrescue.co.uk. If you are a professional advisor with a troubled client, please suggest they visit www.companyrescue.co.uk or contact me as above.

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