Angry property owners threaten not to support another CVA now the market has picked up

Embattled sportswear retailer JJB Sports is to decide imminently on whether it will attempt a second company voluntary arrangement (CVA) as it seeks to shed a further 50 to 100 stores in a bid to safeguard its future.

A potential CVA, which would be its second within two years, has angered landlords. Restructuring firm KPMG - which carried out JJB’s first CVA - has been meeting landlords since the end of last week to discuss options. A decision on a CVA or other restructuring option is expected by Monday.

Some landlords told Retail Week they would not support another CVA because the property market has picked up since 2009, when JJB undertook its first CVA, and they believe they could re-let the stores. They are also balking at the terms of the potential CVA - it is understood that only landlords are being asked to take a hit, while other creditors such as suppliers Nike and Adidas are protected.

JJB warned last week it was in danger of running out of cash by April and its like-for-likes had plunged 11.5% in the five weeks to January 23. The 250-store retailer, which is in talks with rival JD Sports about a sale of the business and is conducting a fundraising, has to present a new business plan to its banks on February 24, which could include a CVA.

CVAs have proved controversial with landlords as they feel they have no option but to vote them through or face an empty store. In its first CVA, JJB shut 140 stores. Other retailers such as Blacks Leisure and Focus have also used CVAs.

One big landlord said it was “unlikely” to back a second JJB CVA. He said: “Most people are saying once bitten twice shy.”

Another property source said the idea of a second CVA is “gobsmacking”. He said: “The first one served a purpose. But now the market is in a better place. They will get very little support from landlords.”

Another landlord said while they would not be “slamming the door in their faces”, they would be “more sceptical the second time round. We will be asking what makes this one different from the last one”.

A source close to JJB said while a CVA was not certain, discussions are “going down that line”. The source said a CVA would not be attempted unless JJB was confident landlords would be receptive.

A British Property Federation spokesman said: “Landlords give each CVA proposal very serious consideration.” He said landlords would also like some share of the retailers’ future successes in return for helping the business survive.

Both JJB and KPMG declined to comment.

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