- Implications of CVAs and new restructuring plan on real estate finance lenders during coronavirus (COVID 19)
- What are CVAs and why are they particularly relevant to REF transactions in times of financial difficulty?
- What is the new restructuring plan under the Corporate Insolvency and Governance Act 2020 (CIGA 2020)?
- What are the practical implications for occupational tenants and, as a result, landlord-borrowers under REF facilities of the expected increased use of CVAs to restructure lease liabilities?
- Which provisions of a typical REF facility are likely to be affected if an occupational tenant is subject to a CVA?
- What practical steps should landlord-borrowers take in relation to REF facilities if one of their occupational tenants becomes subject to a CVA?
- How might REF lenders change their lending behaviour going forwards in light of the ongoing pandemic and more general long term shifts in consumer habits when it comes to retail and leisure, particularly in light of uptake in use of CVAs in recent years?
Banking and Finance analysis: Timothy Bromley-White, solicitor at Macfarlanes LLP, discusses the implications of company voluntary arrangements (CVAs) and the new restructuring plan on real estate finance (REF) lenders during the coronavirus (COVID 19) pandemic. He provides an overview of the current usage of CVAs, noting that the overall decrease in their use disguise a marked increase in the use of CVAs in the hospitality, retail and fashion sectors. He concludes that REF lenders investing in these sectors may need to consider the underlying business of the tenants more closely than they might have had to do in the past.
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