U.K. property companies British Land Co. PLC and Hammerson PLC and fund managers M&G and Aberdeen Standard are legally challenging an insolvency procedure involving rent cuts at outlets of hair and beauty group Regis, the Financial Times reported.
In its company voluntary arrangement proposal, Regis said that a number of factors such as decreasing client numbers and higher wage costs helped to create a "perfect storm" for the company, damaging business and generating cash flow issues. The arrangement gained creditor approval in October and led to rent cuts of up to 100% at more than 100 stores.
The landlords are challenging the provisions of the Regis CVA, dubbing them "substantively unfair" due to, among other things, wide-ranging alterations to lease terms, the publication noted, citing High Court legal documents filed in November.
Regis offered to change certain CVA terms, but the landlords are intent on pursuing legal action, a source close to the group revealed.
The plaintiffs are also calling into question a series of transactions that occurred close to the October 2017 sale of Regis U.K. by the American hair salon operator Regis Corp. to private equity firm Regent LP.
The publication could not obtain a comment from Regis Corp. on the matter, while Grant Thornton, which acted for Regis U.K. in the CVA, declined to comment.