Proposals for the company voluntary arrangement (CVA) of Hobbycraft Trading Limited were approved on 13 May, marking another household name restructuring in the retail sector. Landlords will recognise the now-familiar CVA format: leases categorised by viability, with viable locations preserved and non-viable sites facing substantial rent reductions.
However, what sets the Hobbycraft CVA apart is that nearly all of its leases have been designated as Category A – viable – and subject to minimal change. All the CVA has done is move the leases to monthly rent payments. This suggests that the CVA's real target is not lease liabilities but the company's business rates burden – signalling a pivot in focus from property costs to broader structural overheads.
This may point to a stabilising retail market, with the post-pandemic correction in rents having perhaps run its course and rent levels now less likely to be the target of future restructures. Whether Hobbycraft signals a turning point in the use of CVAs against landlords remains to be seen and we will continue to monitor developments closely.
