Company Voluntary Arrangements (CVAs) in consumer facing industries, which have been adversely affected by continuing and fluctuating Covid-19 social distancing restrictions, have increased by 375%, according to research conducted by PwC.
Between June and November in 2020, 19 CVAs were launched in the RCHL sector compared to four over the same period in 2019, with most covering the hospitality and fashion retail sectors.
In an analysis of these CVAs, almost eight in ten of 2,992 business sites secured agreements with landlords to amend lease terms, allowing large sections of business real estate to remain operative.
The top three city locations for large RCHL CVAs were London (595 sites), Birmingham (86 sites) and Edinburgh (59 sites).
David Baxendale, restructuring partner and CVA supervisor at PwC, said: “Covid-19’s impact on businesses has resulted in a large number of companies using a CVA as an effective means of survival through measures including injecting new money from lenders or shareholders, rent reductions and reducing property portfolios.
“The overarching objective is to give companies the best chance of continuing as a going concern in light of the immediate challenges presented by Covid.”
He added: “Some of these CVAs delivered a full restructuring with various stakeholders shouldering the burden and new funds being injected, alongside others which focused on landlords in isolation.”
