Landlords rethink High Court action with PowerHouse after the retailer suddenly went into administration
Landlords embroiled in a High Court action with PowerHouse were this week reviewing their options after the electrical goods retailer suddenly went into administration.
Two groups of landlords are fighting a company voluntary arrangement that PowerHouse struck with its creditors in February. It allows the retailer to avoid liability for its leases. A trial is due to start in March 2007.
New Zealand-based Pacific Retail Group, which owns PowerHouse, said today that staff had been sent home from around 50 stores.
However, the CVA could continue because it is being carried out on behalf of the parent company rather than PowerHouse. It is understood the final decision rests with financial services firm Smith & Williamson, which is supervising the CVA. Smith & Williamson was unavailable for comment at the time of going to press.
‘We understand that the CVA can continue even if PowerHouse is not liquid,’ said Roland Nevett, director of retail warehousing at Land Securities, one of the landlords involved in the case. ‘I suspect that Pacific Retail Group would want to keep it going because it protects them against their lease liabilities. As far as the case is concerned, it may not change anything, but we will have to wait and see.’
The first group of landlords comprises Prudential, Land Securities, Hammerson, London Merchant Securities, BMW (UK) Trustees and Richminster Properties. Law firm Lovells, which represents the first group, said it could not comment before it had talked with its clients.
The second group is Morley Fund Management, BTW Shiells, Save and Prosper Pensions, and Slough Estates.