Landlord's attempt to overturn Caffè Nero CVA fails...

The High Court has today given judgment in the insolvency case of Young v Nero Holdings Ltd [2021] EWHC 2600 (Ch), determining that the company voluntary arrangement ("CVA") which was on the brink of approval by creditors was not capable of challenge by an aggrieved (yet well supported) landlord, Ronald Young. 

Mr Young received £100,000 from a third party investor who wished to purchase the Caffè Nero group in return for an undertaking that he would not accept any settlement offer or withdraw his challenge to the CVA. Despite the facts of this matter being unique, the decision is likely to be viewed unfavourably by landlords following a period in which tenants of commercial premises have been afforded unprecedented protection. 

Landlords will be consoled by the judge's obiter comments that suggest Mr Young was deemed to have a legitimate interest in the CVA and that the presence of an investor with a stake in the outcome was not adjudged to be an illegitimate collateral purpose. As a result, it appears that future ventures between landlords and third parties seeking to acquire a distressed asset or business will not automatically be obstructed by the courts. 

Occupiers will appreciate the commercial pragmatism and benefit of the doubt particularly given the idiosyncratic characteristics of the electronic voting procedure used. With landlords continuing to be significant creditors to many businesses in the retail, leisure and hospitality sectors, this outcome will be a welcome boost on the road to economic recovery for the high street.