Rent Deadline Threatens Retailers

The high street is bracing itself for a wave of retail collapses this week as a huge rent deadline looms.

Wednesday will be one of four so-called “quarter days” where rents have to be paid three months in advance, a system seen by many retailers as archaic.

Richard Fleming UK head of restructuring at the KPMG, said: “The March rent quarter date may be the nail in the coffin for retailers who have not traded well over the past few months.

“Creditors effectively have to decide now whether to support businesses now through to the end of the year."

High profile retail magnates including Topshop boss Sir Phillip Green have been lobbying the government for a change to the system, but until it is overhauled this rent deadline could spell the end for many business who are already teetering on the brink due to recessionary pressures.

Many retailers are currently in the process of negotiating with landlords a switch to monthly rent payments to bolster cash flow. Other solutions include disposing of empty or underperforming stores, through company voluntary arrangements (CVAs).

Rarely seen until the recession, CVAs have become more common as businesses face the threat of failure. They allow companies under threat of administration to renegotiate debts with unsecured creditors but some landlords regard them as a tool to escape individual lease liabilities.

Posted at 04:28PM Mar 24, 2010 by Marc Stenton in Insolvency  |  Comments[0]