Quote:
Originally Posted by Chris
It’s worse for the landlords if a chain goes bankrupt and they immediately lose 100% of the income, then have to apply to the liquidator to try to recover back rent. All the CVA process really does is force intransigent creditors to confront economic reality, which in turn may lessen the frequency and severity of these massive job loss news stories.
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Yes, many commercial landlords simply will not face economic reality and renegotiate rents to save businesses. They would rather have nothing than something, in addition, they then have to pay the business rates, for security and insurance.
I once read that the reason is because, for accounting purposes, they can include empty properties in their figures for the rent that is being asked for. If they agreed to lower the rent, the figure would have to be the new lower rent. How true this is I don't know, but if this is correct, creative accounting cannot replace hard cash.
Also, some commercial landlords ask for a percentage of the profit that a business makes. It was this that stopped us from signing up to a property a few years ago as they refused to drop this clause in the lease. The property remained empty for another three years before being let, so they lost out in the end.