Following the recent increase in company voluntary agreements (CVAs), the British Property Federation (BPF) has called on the government to conduct an urgent review. The BPF believes the process is now being misused, saying that this risks undermining the UK’s global reputation and deterring much-needed investment into town and city centres, at a time when it is arguably more important than ever that the UK demonstrates it is open for business.
The BPF supports the proper use of CVAs in order to help businesses in genuine distress and are keen that CVAs continue to achieve these objectives. There is, however, increasing frustration about the practice of some recent CVAs. The issues include:
- Lack of transparency
- Unfair discrimination between different creditors
- The lack of regulation to ensure CVAs are used appropriately and to drive good practice
CVAs should not be entered into lightly and it is vital that the full impact of CVAs is appreciated:
- On property owners, and the pensioners’ savings they invest
- On taxpayers and local communities
- On businesses and the local economy
The BPF calls on Government to conduct an independent urgent review of CVAs. In order to restore some confidence in the interim, we are advocating the following immediate steps:
- CVAs affecting more than five outlets are referred to an independent third party for review. The Pre-Pack Pool could perform such a function.
- The Insolvency Profession and the BPF work together to codify what is good practice in terms of voting rights and voting structures for CVAs.
- Insolvency professionals follow BPF best practice guidance on engagement with property owners as early as possible in the CVA process.
Melanie Leech, Chief Executive, British Property Federation said “The CVA process is intended to be part of a comprehensive business recovery plan. Property owners, looking after savers and pensioners’ money, will support businesses who demonstrate this commitment but must protect those pensioners against unfair action that penalises their interests. Urgent action is required and we are calling on government today to undertake a review, so that we can restore the CVA process to its original purpose.”