A GROUP of landlords has launched a legal challenge against a restructuring of House of Fraser which would see over half its department stores closed and rents reduced on others. In the first challenge in the Scottish courts to a company voluntary arrangement (CVA), a petition was filed on behalf of certain creditors.
More than 75 per cent of creditors’ votes last month backed plans to close 31 of Scottish-registered House of Fraser’s 59 stores and cut rents on 10 of those left open, despite opposition from landlords unhappy at shouldering the burden.
The British Property Federation, alarmed at the increasing use of CVAs by struggling retailers, said confidence in the process is at an all-time low and called for an urgent government review.
Landlord adviser Mark Fry of restructuring firm Begbies Traynor said: “Landlords have been prejudiced and there have been material irregularities in the implementation of House of Fraser’s CVA.
“Our clients have decided to file a legal challenge to the CVA to protect their interests and to ensure that landlords are not unfairly treated in future CVAs.
Landlords experienced a complete lack of engagement and transparency from the outset of the House of Fraser CVA process, despite repeated requests for details on how the company is expected to trade over the next seven months.