Vol 18 (2021) - Issue 3

Article preview

Lazari Properties 2 Limited & Ors v New Look Retailers Limited & Ors [2021] EWHC 1209 (Ch)

Synopsis
This highly anticipated judgment is the first of two decisions from the High Court on recent commercial landlord-led challenges to the use of the company voluntary arrangement ('CVA') framework under Part 1 of the Insolvency Act 1986 (the 'Act'). At the time of writing, the Court's judgment on the closely related Regis CVA challenge is yet to be handed down, as is the Court's decision on the sanction hearing for the Virgin Active restructuring plan, which involved issues similar to those in this case as regards differential treatment of different categories of landlords and other financial creditors within a single process.
The CVA proposed by New Look Retailers Limited ('New Look') was challenged by certain landlords (the 'Applicants'), on grounds of unfair prejudice, material irregularity and an asserted lack of statutory jurisdiction. The Court dismissed the challenges on all grounds. The Court's dismissal of the unfair prejudice challenge centred on the conclusion, in particular, that differential treatment as between unimpaired and compromised classes will not per se create unfair prejudice, neither will the fact, without more, that the statutory voting majority is obtained through the votes of an unimpaired category of creditors. Comparatively little of the judgment is dedicated to the challenge on material irregularity, which itself was dismissed predominantly on the basis that there is no exact science in the calculation of discounts to be applied to the value of future debt claims for voting purposes.