Company Voluntary Arrangements (CVAs) have become a familiar feature of the commercial property landscape, particularly in the retail sector. The recent decision in Hobbycraft Trading Limited v Ropemaker Properties Limited (County Court, 6 August 2025) offers a fresh insight into how the courts in England and Wales may approach landlord-tenant dynamics in the context of a CVA. In particular, the case highlights the court’s willingness to intervene in cases where forfeiture is seen as disproportionate, even if it may technically be lawful.
Interim injunction granted allowing occupation
In this case, the court granted an interim injunction requiring the landlord to allow the tenant back into possession of the property following a lawful forfeiture. The forfeiture had been triggered by the tenant proposing a CVA, but the court found there was a serious question to be tried regarding the tenant’s application for relief from forfeiture. Pending that determination, the tenant was permitted to resume occupation.
The CVA itself was relatively benign. Hobbycraft proposed to meet its obligations to the landlord in full, with the only change being a shift from quarterly to monthly rent payments. The court applied the American Cyanamid principles, concluding that damages would not be an adequate remedy for the tenant, and that the balance of convenience favoured granting the injunction. Notably, the judge acknowledged that the tenant’s cross-undertaking in damages might be of limited value but found this did not outweigh the practical realities, particularly as the landlord was unlikely to secure a new letting in the interim.
Commercial Implications for Landlords
While CVAs are sometimes viewed with scepticism (particularly where they involve rent reductions or lease terminations), the Hobbycraft case illustrates that not all CVAs are created equal. Here, the tenant was not seeking to avoid its obligations, and simply sought to restructure payment terms. The court’s willingness to grant interim relief suggests that landlords may face judicial scrutiny if they act overly precipitously in response to a CVA.
For landlords, this case underscores the importance of assessing the substance of a CVA rather than reacting to its mere existence. Where tenants continue to meet their obligations, albeit on revised terms, forfeiture may not be the most commercially or legally sound response. Moreover, landlords should be aware that relief from forfeiture remains a discretionary remedy, and courts may be sympathetic to tenants seeking to preserve viable trading operations.
In a market where CVAs remain a tool for retail restructuring, this case may signal a shift in judicial attitudes. Looking forward, we may expect to see further decisions along these lines that favour pragmatism and continuity over strict contractual enforcement. Landlords should tread carefully and seek legal advice before taking steps that could be challenged, especially where the tenant’s proposals are commercially reasonable.
This case provides a timely reminder for landlords that commercial pragmatism should be at the forefront when making strategic decisions. If you are a commercial landlord or tenant dealing with imminent or actual insolvency issues or, you have any concerns about how this case might affect you or your business, please do not hesitate to contact our Real Estate Disputes or Restructuring & Insolvency Teams, or your usual Brodies Contact.
