British high street fashion retailer New Look is the latest firm to have agreed a CVA to avoid collapsing into administration. More than 11,000 jobs have been saved and no store closures have been announced.
A Company Voluntary Arrangement (CVA) is a legally binding agreement a company has with its creditors, which allows a proportion of its debts to be paid back over time to ease the burden of its finances.
New Look was given the go-ahead by its creditors yesterday to move forward with the CVA.
As part of the CVA agreement, New Look will be switching more than 400 of its shops to a turnover-based rent model; a three-year rent holiday on its 68 remaining stores; and some rent break clauses which a due to be finalised imminently.
As part of the plans, New Look’s current debt of £550m will be decreased to £100m. A further £40m will be used to support the business as it looks to survive the COVID-19 pandemic.
New Look CEO Nigel Oddy said: “I would like to take this opportunity to thank our landlords and creditors for their support for our CVA, which, alongside the consequential financial restructuring that will now be progressed, will provide us with enhanced financial strength and flexibility, and a sustainable platform for future trading and investment.
“We still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy. We look forward to working closely with our landlords and all creditors to ensure we can navigate the uncertain times ahead together.
“Over the course of the last three years we have successfully implemented our turnaround plan: returning to the proven broader appeal product and value-led pricing that we are known for, fundamentally realigning our supply chain to be faster and more flexible; making our omnichannel model more cohesive than ever; driving operational efficiencies; and bringing in new talent across the business. The impact of COVID-19 has reinforced this relentless focus on our customer-orientated strategy.”
Daniel Butters, a supervisor at Deloitte, which handled the CVA for New Look, said: “The approval of the CVA is an important milestone in New Look’s restructuring, enabling the business to move forward. The CVA will provide a stable platform for its management team’s strategy and we wish them well for the future.”