High street retailer New Look has asked landlords to change the way it pays rent on most of its stores in a bid to secure a £40m cash injection.
The fashion chain launched a company voluntary arrangement (CVA), which involves resetting 402 stores to turnover rent to align rent payments with future performance.
The turnover percentage will be set at up to 12 per cent.
Under the proposals New Look will not pay rent on its remaining 68 stores.
The CVA plan also includes enhanced landlord breaks to allow property owners to exit the lease if they can find a different tenant on better terms.
In May New Look announced it had secured a £40m cash investment, conditional on an overhaul of its leasing obligations.
Landlords and creditors will vote on the proposals on 15 September, with New Look requiring at least 75 per cent to approve the plans.
New Look chief executive Nigel Oddy said the company is launching the CVA “out of absolute necessity”.
“Covid-19 has changed the retail environment beyond recognition, accelerating the permanent structural shift in customer spend and behaviour from physical retail to online, which we have seen in recent trading,” he said.
“Despite this, we still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy.
“We remain committed to the high street and serving our customers through our portfolio of local, conveniently-located stores in towns across the UK.”
Deloitte partner Daniel Butters added: “It is important to stress that no stores will close on day one, and employees and current suppliers will continue to be paid on time and in full.”