This Sunday is the March Quarter Day when rent is due on commercial properties up and down the UK. This is always a nervous time for retailers as they have to find 3 months rent in advance. It is no coincidence that Game Group chose this week to go into administration before the rent was due. Of course, in the current economic climate many landlords will be open to negotiation and may allow tenants to pay on a monthly basis, so ask! Landlords of shopping centres who may be seeing rising vacancy rates may be more open to this proposal.
So if you are a struggling multi site retailer you can use a CVA to jettison stores that are putting the viability of the whole business at risk. The landlord does not automatically have the casting vote in any proposal even though rent may be the biggest cost. The reason being that rent is in advance so they can only vote in relation to the arrears of any rent. Of course if you have run up large arrears then that situation may change. However, given the somewhat antiquated legal remedies for rent collection, such as distraint and forfeiture, high levels of rent arrears are rare in commercial cases.