The conversion of an administration to a CVL, to facilitate a return to unsecured creditors.
The challenge
This matter was referred to us by a solicitor, following an ongoing shareholder dispute.
The company traded as a pharmaceutical market-research business. It had experienced several delays in receiving payment from customers, as well as reductions in payments due, and had subsequently encountered cash-flow issues.
With liabilities of around £153k and no viable future funding options, the directors sought help.
The solution
When meeting with the directors, we explored all restructuring and insolvency options. It was concluded that administration was the most viable option, providing the best outcome through the sale of the business.
A pre-pack sale was achieved on the same day as the company entered administration.
Following approval of the joint administrators’ proposals and the conclusion of the administrators’ duties, the case was converted to a CVL.
The outcome
The transfer of all the employees to the purchasing company under TUPE meant that all jobs were preserved, and no employee liabilities incurred.
The absence of a break in supply of services enabled enhanced realisations, including a much higher realisation for goodwill.
Following the conclusion of the ongoing CVL, a dividend of close to 100p in the pound is anticipated.
