Architects practice

We were approached by a firm of architects who practised as a Partnership, following two years of projects being post poned, the partnership owed significant arrears of PAYE and VAT. Were the Partnership to have failed the Partners faced the possibility of Personal Bankruptcy.

Creditors agreed a Partnership Voluntary Arrangement which enabled the practise to continue, the arrangement is on course to repay creditors 100p in the £1 over its duration.

London based book distributor

We were able to assist the directors of a book distributor agree CVA proposals with its creditors in. The CVA instalments were fixed, on the basis of the directors statement of affairs it was estimated that creditors would receive approximately 33p in the £1 over 5 years. The CVA completed, preferential creditors were paid in full, unsecured creditors received 19p in the £1, whilst this was below the forecast of 33p it was significantly above the dividend which creditors would have received had the company been Liquidated.

During the CVA the company relocated from London to Gloucestershire and then was acquired by a company on the South coast.

AIM Listed PLC’s

Working closely with our City contacts we have developed a niche CVA aimed at restoring solvency to AIM listed companies whose shares have been suspended following the insolvency of the Group or its subsidiary companies. Typically the listed company’s only asset will be its investment in its insolvent subsidiaries which will generally be worthless; a CVA is proposed to creditors and members whereby creditors are invited to swap their debt for new shares in the company. If these proposals are accepted, we work with investors who then form a new Board and invest working capital in the company such that it is returned to solvency and the shares are listed.

The company is then known as a shell company which is attractive to companies seeking an AIM listing, as a listing can be gained by reversing into a shell rather than the uncertainly of a listing via an IPO. The aim is to achieve a liquid market in the shares so that creditors and the old shareholders have a prospect of some recovery.

The only alternative to such a CVA would be the Liquidation of the holding company which would result in no recovery for creditors or shareholders.

A recent example was Beaufort International Group Plc, we acted as Nominee and Supervisor of a “debt swap” CVA after it was re-listed on AIM, the Board raised a further £2m and Timestip PLC was reversed into the shell.

Midlands based Security Company

We were approached in by a Midlands based security company who owed creditors over £350,000, including PAYE/NI arrears of £265,000. We assisted the directors make CVA proposals which would result in a far better return for creditors than if the company had been Liquidated. Creditors accepted the CVA proposals which gave the company and its 100 employees a lifeline.

In the first two years of the CVA the business continued to lose money and accumulated new arrears of VAT totalling £200,000, however by year three, management had turned the business around and back to profitability. With the support of HM Revenue and Custom’s Voluntary Arrangement Service the company paid the post CVA arrears off whilst maintaining its monthly installments due under the CVA. The company paid off the remaining sum due under the terms of the CVA some six months early. The CVA has therefore now been completed and the Company continues to prosper.