Retail restructuring: A landlord’s guide to CVAs and store closures

Q3 2025 has been a sobering quarter for shopping centre landlords. According to Savills’ latest Shopping Centre and High Street report, the sector witnessed a wave of retail casualties. Revolution Bars closed 25 venues, reducing its estate from 90 to 65 sites. Prezzo continued its downsizing strategy with further closures following an earlier decision to shut 46 restaurants. Buzz Bingo entered a Company Voluntary Arrangement (CVA) in late September, closing nine halls while securing revised lease terms for its remaining 82 venues. Most significantly, Bodycare collapsed entirely, with administrators confirming that all 56 remaining stores would close by the end of November, bringing total closures to nearly 150 across the UK.

For shopping centre landlords, each headline represents more than just market commentary. It represents a potential void, a CVA proposal landing on your desk, or a race against time to salvage what you can from a deteriorating tenant covenant. While the causes of individual failures vary, the Savills report highlights that broader cost pressures (including wages, National Insurance, and utilities) are creating unsustainable operating conditions across the sector.

The question isn’t whether more restructurings are coming. The question is whether you’re prepared to protect your position when they arrive.

Understanding the CVA threat

A Company Voluntary Arrangement (CVA) is a formal insolvency procedure that allows a financially distressed company to reach a binding agreement with its creditors while continuing to trade. It sits between informal restructuring and full administration, offering struggling businesses a potential lifeline without the reputational damage and operational disruption of liquidation.

For retail and leisure operators, CVAs have become the restructuring tool of choice. They’re quick, relatively cheap, and (from the tenant’s perspective) offer a route to survival without the finality of administration. For landlords, however, CVAs represent a significant threat to rental income and asset value.

The mechanics are straightforward but brutal. A company proposes a legally binding agreement to its creditors, typically involving rent reductions, lease terminations, or arrears write-offs. If 75% of creditors (by value) vote in favour, the CVA binds all creditors, including those who voted against it. Landlords, as unsecured creditors, have no priority status. Landlords are voting alongside trade creditors, HMRC, and suppliers, all with different interests and incentives.

The Savills report notes that Revolution Bars’ restructuring package delivered £3.8 million in annualised savings through venue closures and rent renegotiations. That saving came directly from landlords’ pockets. Similarly, Buzz Bingo’s CVA secured revised lease terms across its estate, almost certainly involving rent reductions or other concessions that landlords had little power to refuse.

This imbalance is deliberate. CVAs were designed to rescue viable businesses, and the legislation assumes that some creditor pain is acceptable if it preserves jobs and business continuity. The problem is that “viable” is a subjective assessment, and landlords often bear a disproportionate burden compared to other creditor classes.

Why CVAs hit landlords hardest

The structural disadvantage landlords face in CVAs is well documented but worth repeating. Unlike secured creditors (who are often carved out of the arrangement) or preferential creditors (who get paid first in insolvency), landlords sit at the bottom of the creditor hierarchy. Your rental income is treated as an operating expense that can be cut to preserve the business.

Moreover, the voting structure often works against landlords. A CVA proposal might close half your tenant’s stores while keeping the other half open at reduced rent. Landlords with stores earmarked for closure may vote against the CVA, but landlords with stores remaining open (even at reduced rent) may vote in favour, believing something is better than nothing. The tenant only needs 75% by value to pass the proposal, and they’ll structure the CVA to achieve exactly that outcome.

The Savills data on Q3 casualties illustrates this dynamic. Revolution Bars didn’t close randomly. It closed 25 underperforming venues while preserving 65 sites it deemed viable. Landlords of those 25 sites had no meaningful recourse. Even if they voted against the CVA, they were outvoted by other creditors who benefited from the restructuring.

This creates a perverse incentive. Tenants in financial distress know that landlords are vulnerable, so they use the CVA process (or the threat of it) to extract concessions. Even if the CVA ultimately fails and the company enters administration, landlords have often already agreed to rent reductions or lease variations that weaken their position.

Legal strategies when a CVA proposal arrives

The first 28 days after a CVA proposal is issued are critical. This is your window to assess the proposal, gather intelligence, and decide whether to fight, negotiate, or accept.

One option is to challenge the proposal on legal grounds. CVAs can be challenged for unfair prejudice or material irregularity. Unfair prejudice typically means landlords are being asked to bear a disproportionate burden compared to other creditor classes. Material irregularity covers procedural failures, misleading information, or breaches of the Insolvency Act. Challenges must be made within 28 days of the CVA being approved, so speed is essential.

However, challenges are expensive, time-consuming, and rarely succeed. Courts are reluctant to overturn CVAs unless the prejudice is extreme or the irregularity is clear. Most landlords lack the appetite or resources to litigate, which is why CVAs succeed so often.

A more pragmatic approach is often to negotiate directly with the tenant before the CVA vote. If your site is critical to the tenant’s ongoing business, they may be willing to offer better terms in exchange for your vote. This could mean a smaller rent reduction, a shorter concession period, or additional security such as a parent company guarantee. The key is to move quickly. Once the CVA is approved, your negotiating position collapses. In the run-up to the vote, the tenant needs certainty and may be willing to compromise to secure your support.

Of course, not all tenants are worth keeping. If the CVA proposes a 50% rent reduction for three years, you need to calculate whether that’s better than getting the unit back and re-letting it. Consider the current void rate, re-letting costs, void periods, and the likelihood of finding a replacement tenant at a higher rent. In some cases, the void is less damaging than a permanently discounted tenant.

This is where shopping centre landlords with strong asset management teams have an advantage. They can model scenarios, assess local demand, and make commercial decisions based on data rather than emotion. If your centre has low vacancy and strong demand, you may be better off rejecting the CVA and taking the unit back. If your centre is struggling, accepting the CVA may be the pragmatic choice.

Forfeiture timing also requires careful consideration. If the tenant is in arrears, you may have grounds to forfeit the lease before the CVA is approved. Once a CVA is in place, forfeiture becomes significantly more difficult, as the arrangement typically includes a moratorium on enforcement action. However, forfeiting prematurely can backfire. If the CVA ultimately fails and the tenant enters administration, you may have destroyed value by triggering an early termination. Forfeiture is a blunt instrument and should only be used when you’re certain the tenant is irretrievable, and you have a clear plan for the unit. It’s not a negotiating tactic; it’s a last resort.

The Part II Landlord and Tenant Act 1954 complication

Security of tenure under the Landlord and Tenant Act 1954 adds another layer of complexity when tenants are struggling but haven’t yet entered formal insolvency. A tenant facing financial difficulties may still be entitled to a new lease at the end of the contractual term, and you may have limited grounds to oppose renewal.

The most viable ground for opposition is often Ground (f), which allows you to oppose renewal if you intend to demolish or reconstruct the premises. This requires genuine intent and sufficient planning evidence, but it offers a route to regain possession without waiting for the tenant to fail.

Alternatively, if the tenant is in persistent breach of lease covenants (unpaid rent, poor maintenance, breaches of user clauses), you may have grounds to oppose under Ground (b) or (c). However, these grounds require clear evidence and robust documentation. If you have waived a number of breaches, you may struggle to demonstrate persistent breach.

The challenge is timing. If you wait until the tenant formally proposes a CVA, you’ve likely missed the window to oppose renewal effectively. By that stage, the tenant is already in restructuring mode, and your leverage has evaporated. Proactive landlords identify struggling tenants early and begin positioning for lease expiry or break clause exercises before the situation becomes critical.

Proactive risk management

The best CVA strategy is to avoid being in one in the first place. This means identifying vulnerable tenants early and taking steps to protect your position before they enter distress.

Continuous monitoring of tenant performance is essential. Late rent payments, reduced footfall, closure of sister sites, and declining turnover (if you have visibility of it) are all early warning signs. If a tenant is consistently paying rent on the last possible day, or requesting payment plans, they’re already in trouble. Don’t wait for a CVA proposal to arrive before acting.

Equally important is reviewing the strength of your guarantees and security. Rent deposit deeds and parent company guarantees are only valuable if they’re properly documented and enforceable. Many landlords discover too late that their security is inadequate, outdated, or unenforceable. Review your guarantees now, while the tenant is still solvent, and consider whether you need to strengthen them.

Early engagement with struggling tenants can also pay dividends. If you suspect a tenant is in difficulty, open a conversation. They may be receptive to a short-term rent concession or lease variation if it helps them avoid formal restructuring. A negotiated deal (properly documented) is almost always better than a CVA imposed on you by creditor vote.

However, be cautious about informal arrangements. A verbal agreement to reduce rent or defer payments is not enforceable and won’t protect you if the tenant later enters insolvency. Any concession must be documented in a formal deed of variation, with clear terms on duration, clawback provisions, and reinstatement.

Finally, assess your portfolio exposure. If a single tenant occupies multiple units across your portfolio, a CVA affecting one site may trigger closures across others. Understanding your concentration risk helps you model worst-case scenarios and plan accordingly.

Administration

Not all struggling tenants pursue CVAs. Some go straight into administration, which presents a different set of challenges for landlords. In administration, the appointed administrators have significant powers to disclaim leases, meaning they can walk away from unprofitable sites without landlord consent.

If a lease is disclaimed, you’re left with a void and a claim for damages against the insolvent estate (which typically recovers pennies in the pound). However, you also regain possession immediately, which may be valuable if you have re-letting prospects.

Administration also triggers the moratorium on enforcement, meaning you cannot forfeit for arrears or pursue other remedies while the administration is ongoing. The administrators will assess which leases to keep and which to disclaim, and landlords have limited input into that decision.

The key difference between a CVA and administration is control. In a CVA, you get to vote. In administration, you don’t. The administrators act in the interests of creditors collectively, and landlords’ interests are rarely prioritised.

Rent deposits and guarantees

Many landlords place significant reliance on rent deposit deeds and guarantees, assuming these provide adequate protection against tenant default. The reality is more nuanced.

Rent deposits are generally safe in insolvency, provided the deed is properly drafted and the funds are held in a separate account. However, deposits typically cover only three to six months’ rent, which may not be sufficient if the tenant fails mid-term and the unit remains void for an extended period.

Parent company guarantees are only as strong as the parent company itself. If the tenant and parent are both in financial distress, the guarantee is worthless. Similarly, Authorised Guarantee Agreements (AGAs) from outgoing tenants are valuable only if the assignor remains solvent.

The lesson is that security must be proportionate to risk. For high-value tenants or long leases, consider whether your security adequately reflects the potential loss. If not, renegotiate before the tenant enters distress, when you still have leverage.

The road ahead

The Q3 2025 casualties are unlikely to be the last. The Savills report highlights that cost pressures remain intense, with rising National Insurance contributions, a higher National Minimum Wage, and the looming business rates reform all adding to operator burdens. The British Retail Consortium has warned that escalating costs are placing unsustainable pressure on high street businesses, with two-thirds of retail CEOs planning to raise prices in response.

For landlords, this suggests that tenant distress is not an anomaly but a structural feature of the current market. CVAs, administrations, and store closures will continue, and landlords who are unprepared will bear the brunt of each restructuring.

However, the Savills data also shows resilience in well-managed assets. Vacancy rates continue to decline (high street voids at 13.5%, shopping centres at 16.5%), and footfall, while volatile, remains marginally positive. Prime assets with strong tenant mixes and proactive asset management are weathering the storm. It’s the secondary and tertiary assets, with high vacancy and weak covenants, that are most exposed.

Why Newmanor Law?

Restructuring is not a one-size-fits-all process. Every CVA is different, every tenant’s circumstances are unique, and every landlord’s priorities vary. Our approach is to assess your specific exposure, identify your leverage points, and execute a strategy that protects your income and your asset value.

Image from Business Sale Report.