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Focus DIY has CVA approved 31 August 2009

Focus, owned by US private equity group Cerberus, said its creditors, mostly landlords, had approved its proposed Company Voluntary Arrangement (CVA) by over 90 per cent in a vote.
Meanwhile, the company has said it is trading ahead of its expectations.

Focus, which has been hit hard by a plunge in house purchases and spending on "big ticket" items in the recession, will reduce its exposure to 38 non-trading stores that have been costing the group £12 million a year through the CVA.

While it will remain a tenant of the stores and be responsible for rates on the properties, it will no longer be responsible for rent, service charges and insurance, which will revert to landlords.
In return the landlords, which include British Land, Land Securities and Aviva, will get a share of a £3.7 million compensation pot, worth on average about six months rent.
"Trading is currently ahead of management expectations," chief executive Bill Grimsey said in a statement.

"With this CVA now firmly behind us we can concentrate on managing our existing open stores and building on this stable platform to offer the best service to all our customers, suppliers, employees and landlords."

Focus, which trades from around 180 stores, needed three quarters of its creditors to back the CVA, arranged by BDO Stoy Hayward.

The British Property Federation (BPF), representing landlords, says that Focus’s transparent dealings should be held up as an exemplar for future deals, and was backed by creditors Aviva, British Land, Hammerson, Hermes and Land Securities.

Chief executive Liz Peace said: "As we saw with JJB Sports, the key to a successful CVA is putting all the cards on the table and being up front with all parties.

"Landlords will do everything they can to be flexible, and this is a prime example of how the industry has changed massively in recent years. We still need tougher insolvency controls after the Insolvency Service admitted a third of deals don’t meet its standards.

"We also need an insolvency regime that strikes a fairer balance between the rights of the insolvent and debtors. We will see more and more CVAs and pre-packs in the coming months, so it’s vital that insolvency regulation has enough teeth.

"You cannot blame landlords for the failure of their tenants, but at the same time our members are leading the way in changing the face of the industry. It’s a sad fact that some shops have been hit by the rise of the internet and impact of recession and are not going to return to business levels you will only ever see in a boom."

 

 

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