Controversial rents deal saves may suit everyone

Speciality Retail Group's (SRG) company voluntary arrangement (CVA) for the Suits You menswear chain was today effective after passing through a 28-day challenge period. The CVA will see SRG pay 40 per cent less rent on 42 of its 71 stores for the next 18 months, after the plans won the backing of more than 75 per cent of its landlords.

Landlords of non-profitable stores will receive 60 per cent of the full rent for 18 months – equating to 11 months' rent.

SRG will use the CVA to rebalance its portfolio of stores away from the high street to designer outlet parks where its stores are performing better.

Richard Fleming, supervisor of the CVA and restructuring partner at KPMG, said: "Despite the public criticism of company voluntary arrangements by the landlord community, the Suits You CVA, having been unchallenged in the 28-day period, now comes into force."

He warned many more retailers may struggle in coming months as the March rent quarter deadline looms. "Make no mistake that administration leaves casualties on both sides, with landlords appearing well down the food chain in the creditor group," he said.

"Working together with tenants offers a much more constructive path for all concerned, not least the employees. Indeed a successful CVA, usually part of a wider turnaround programme, has been proven to change the fortunes of a company in a short timeframe. Returning companies to health is in the best interests of all stakeholders."