A week after the hearing of the New Look CVA challenge, the same Judge was back in court with the same lawyers, but, save for one point, the result was the same - another unsuccessful CVA challenge by a landlord.
The latest landlord CVA challenge arose out of the hairdressing chain, Regis UK. Subsequent to the CVA being approved by creditors, the company went into administration and the CVA failed. The company played no part in the court proceedings, but the landlords continued their challenge seeking relief against the nominees and a return of their fees drawn.
The challenge was based on various grounds. Firstly, a lack of disclosure of transactions, which the Judge partially agreed with, but found that the failure to disclose did not constitute material irregularity on the facts.
Secondly, inadequacies in the statement of affairs and the estimated outcome statement constituting material irregularity, which the Judge disagreed with, having heard from experts on both sides.
As in the New Look decision, the Judge found that a 75% reduction for landlords' claims and modification of the leases were not unfairly prejudicial. However, the Judge agreed that the treatment of a connected creditor's claim as critical to be paid in full was unfairly prejudicial and revoked the CVA.
Having made that finding, the Judge found that one of the nominees' conduct fell below the required standard, but decided that that conduct was not serious enough to deprive the nominees of their fees.
Carraway Guildford and others v Regis UK and others [2021] EWHC 900 (Ch)
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