The news (Private equity firm pays Dreams' creditors) that Sun European has paid 75p in the £1 to trade creditors of Dreams, which it acquired from the hands of administrators in March is great news for those creditors. But unfortunately the story for landlords is not so good - no such pay out for them.
The commercial logic is obvious - in order to continue trading Dreams needs its suppliers to continue to supply. Whilst there was no legal basis for those debts owed by old Dreams to be paid by new Dreams the ability of those suppliers simply to stop supplying puts them in a strong negotiating position and in this case they have achieved a result which is not bad. Landlords, on the other hand, don't generally have the ability to stop supplying in a way that can impact the whole of the business. At best a landlord may have a few sites and thus be able to negotiate a position on lesser performing sites by leveraging the better sites. But in most cases the negotiating position is pretty much a one way street.
It is this unlevel playing field that means landlrods consistently feel they are getting a raw deal on administrations. Unfortunately it is the very nature of Real Estate that creates this unlevel playing field. I wish I had an easy solution which could level it out but I have to admit I struggle to see a path at this point. So for now I predict whilst trade creditors may get some sweet dreams most landlords will continue to suffer nightmares!
