The British shoe maker Clarks has been accused of freezing landlords out of discussions over its £100 million (€110.9m-$130.0m) bailout by Hong Kong-based private equity firm LionRock Capital.

Landlords are furious that despite facing large losses on rent write-offs, they will only represent 25 percent of a vote to approve the deal at a meeting of creditors and shareholders next month.

The proposal needs to meet a 75 percent approval threshold. The Sunday Times reported that Clarks’ landlords hold £160 million (€177.4m-$208.0m) in debt on aggregate.

Under the terms of the company voluntary arrangement (CVA) unveiled last week, most of Clarks’ 320 British stores will move to rents based on turnover. Around 60 shops will move to zero rent and all arrears built up during the coronavirus pandemic will go unpaid.

Melanie Leech, chief executive of the British Property Federation, which represents landlords, said property owners “are the only creditor stakeholder compromised by Clarks’ CVA” and cannot impact the outcome of the meeting due to their smaller voting bloc.

“This exemplifies everything that is wrong with our insolvency legislation. This type of abuse of CVAs forces property owners to absorb significant losses with little attempt to build a recovery strategy they can support as economic partners,” she said. 

The family that controls the iconic brand has agreed to reduce its 84 percent stake in return for the cash injection as the 195-year-old company battles to survive in the middle of a retail downturn exacerbated by the pandemic.

Clarks insists that no jobs will be lost, while also pledging that staff and suppliers will still be paid. No details have been given on the future share ownership structure if the CVA goes through.