CVAs yet to peak

Company Voluntary Arrangements (CVAs) are still to reach a peak, accountancy firm Wilkins Kennedy has reported. The number of retail CVAs soared 15 percent over the last year, according to the accountancy firm’s research, jumping from 41 in 2009 to 47.
The increase in CVAs has bucked the trend in insolvencies in the retail industry, which declined by 18 percent overall to 1,290 in 2010.

Anthony Cork, director, said the first wave of the recession picked off the weakest retailers.
He thought it might still be a while before the retail sector hit the bottom.

“So while insolvencies might have slowed down slightly, I expect that the increase in retail CVAs has yet to reach its peak. “Rents are a major overhead for retailers, which means rescue plans tend to involve either rent renegotiations or the disposal of unprofitable shops or both. This means that landlords invariably take the biggest hit.”
He said the fact that landlords were increasingly prepared to accept CVAs suggested that recent experiences had taught them that allowing a company to go into administration was an even bigger risk.