Virgin Active’s Restructuring Plan has been approved today by the High Court.
Melanie Leech, Chief Executive, British Property Federation comments:
“This Restructuring Plan sets a dangerous precedent and demonstrates how the law is now allowing wealthy individuals and private equity backers to extract value from their businesses in good times but later claim insolvency, as simply a means to get out of their contractual obligations with property owners. This is fundamentally inequitable and the Government should not allow it to continue.
“Justice Snowden, in handing down his judgement, made clear that the statute gives little guidance on the factors that are relevant when the Court is exercising its discretion to sanction a Restructuring Plan. The Government must ensure clarity and fairness – property owners do not want to see businesses go into administration, but preventing administration should not mean property owners are forced to absorb a disproportionate amount of pain compared to other creditors.
“While the Covid-19 crisis has brought genuine hardship to businesses up and down the country, it has also been cynically used as an excuse to shift onto property owners the cost of years of failings and underinvestment – transferring wealth from property owners, who represent local authorities and millions of pensioners and savers invested in commercial property, to a business’ shareholders.
“This abuse is short-changing our public finances and pensions, and damaging the investment that will underpin town centre recovery and the government’s levelling up agenda to build back better.”