CVA of a retailer enables a new funding partner

Quantuma oversee a successful  Company Voluntary Arrangement.

Overview

  • Long established retailer with multiple sites had breached covenants with its principal lender, leading to the suspension of funding facilities and accrual of liabilities the company could not settle
  • An administration order was sought to take control of the position and to protect the business (in the short term) from creditor action. The administrators immediately started to review the company’s operations and continued to trade the business in the short term with a view to either saving the company or securing a sale to a third party
  • It was clearly identified that the company could benefit from a new principal funding partner with more expertise in the retail sector.
  • The lending facilities totalled circa £2m

Outcomes

  • A new funding partner was found and certain members of the management indicated a willingness to take the company forward via a Company Voluntary Arrangement (‘‘CVA’’) as opposed to via a purchase of the business/assets from the Joint Administrators
  • The prospective purchasers prepared a detailed rationalisation plan for the business and worked with Quantuma LLP (as Joint Administrators) to propose a CVA to creditors (on the basis of a 100p in £ return)
  • The Joint Administrators facilitated meetings with key suppliers and creditors to explain the rationale behind the proposal and to secure their support
  • The CVA was overwhelmingly approved by creditors and the newly recapitalised and stabilised company now operates profitably and is on course to complete the voluntary arrangement successfully

 

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