Electric Guitar PLC, a listed company facing severe financial distress, successfully restructured through a Company Voluntary Arrangement (CVA) supervised by Antony Batty & Company. With liabilities of approximately £1.35 million, the loss of its trading subsidiary, and no ability to raise further capital, the Company was at risk of losing its listing and entering liquidation.
The CVA provided a controlled, legally binding solution that preserved the Company’s AIM listing, compromised around £1.4 million of liabilities, enabled a debt‑for‑equity swap, and created a viable platform for new investment and future acquisitions. The arrangement was approved by creditors and shareholders without modification.
A director of Electric Guitar PLC commented:
“Their expertise and painstaking efforts on our behalf were fundamental to the successful completion of the process.”
Richard Horwood, Director, Electric Guitar PLC
This case study outlines the background to the Company’s difficulties, why a CVA was the most effective option, how the restructuring was implemented, and the positive outcomes achieved.
Background to the Company’s financial difficulties
Electric Guitar PLC was incorporated in March 2021 as a Special Purpose Acquisition Company (SPAC) with a strategy to acquire and build a group of businesses in the digital marketing and advertising sector. Its focus was on data‑driven solutions that enabled brands to capture and use first‑party consumer data in response to tightening regulation on third‑party data and the growing demand for personalised marketing.
The Company listed on the Main Market of the London Stock Exchange in January 2022, raising £1.2 million to support its acquisition strategy. Following an extensive review of opportunities, Electric Guitar completed a reverse takeover of 3radical Ltd in May 2024. 3radical had international operations, an established client base, and proprietary technology.
Post‑acquisition, significant investment was made into scaling 3radical’s sales and marketing capabilities. Although this generated a promising pipeline, legacy revenues declined faster than expected and new revenues were slower to convert. Wider macroeconomic pressures and delays in customer decision‑making during late 2024 added further strain.
At the same time, Electric Guitar’s share price fell by around 90% post‑transaction, restricting its ability to raise further capital and progress its buy‑and‑build strategy. Despite active engagement with prospective investors, including overseas interest, no additional funding could be secured.
The situation worsened when 3radical entered Creditors’ Voluntary Liquidation in December 2024 after failing to secure a buyer. Electric Guitar became an AIM Rule 15 cash shell with no trading operations and liabilities of approximately £1.35 million, including advisory costs, accrued salaries, and HMRC arrears. The Company had exhausted its available funding and could not meet its liabilities as they fell due.
Why a Company Voluntary Arrangement (CVA) was proposed
Following the loss of its trading subsidiary and the absence of funding options, the Board sought professional advice on its restructuring options. A Company Voluntary Arrangement (CVA) was identified as the most appropriate solution.
The CVA provided a mechanism to:
- compromise unsecured liabilities in a structured and legally binding way
- preserve the Company’s AIM listing, which represented a key asset and future value driver
- facilitate a balance sheet restructuring, including a debt‑for‑equity swap
- create a platform for future investment and acquisitions under a restructured entity
Alternative insolvency routes, such as liquidation, would have resulted in the loss of the listing and significantly reduced returns to creditors. The CVA offered a materially better outcome by preserving the corporate vehicle and enabling future value realisation.
Implementing the CVA
Antony Batty & Company Ltd were engaged to advise on and implement the restructuring. The process required close coordination with directors, shareholders, and key stakeholders, particularly given the Company’s listed status.
Key features of the CVA included:
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Creditor Compromise and Funding
A lump‑sum contribution of £115,000 was introduced into the CVA following approval. These funds were used to cover the costs of the arrangement and to pay “critical creditors” in full, including the London Stock Exchange, the Company’s auditors, and registrars – all essential to maintaining the Company’s listing.
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Debt‑for‑Equity Swap
Creditors were offered a distribution of 236,782,175 new ordinary shares. Preferential creditors received 300 shares per £1 of debt, with unsecured creditors receiving a pro‑rata allocation from the remaining pool (estimated at 168 shares per £1).
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Balance Sheet Restructuring
The CVA facilitated the full compromise of approximately £1.4 million of liabilities, significantly strengthening the Company’s financial position.
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Stakeholder Alignment
Connected parties supported the process through a £55,000 convertible unsecured loan, which converted into equity post‑approval, ensuring sufficient working capital to progress the restructuring.
The CVA was approved by creditors and shareholders on 27 March 2025 without modification. Antony Batty & Company Ltd were appointed as Supervisor.
Outcome of the Company Voluntary Arrangement (CVA)
The CVA delivered a successful restructuring of Electric Guitar PLC, preserving value and enabling the Company to move forward as a viable listed entity. Key outcomes included:
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Elimination of Legacy Liabilities
Approximately £1.4 million of creditor claims were compromised, restoring balance sheet solvency.
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Preservation of Listed Status
The Company retained its AIM listing, a critical asset for future growth and investment.
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New Investment Secured
The Company raised £300,000 immediately following the CVA and a further £775,000 in June 2025 to support future acquisition activity.
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Operational Reset
Electric Guitar transitioned to a clean cash‑shell structure, with a reconstituted Board positioned to pursue new strategic opportunities.
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Improved Outcome for Creditors
Creditors received a combination of cash (for critical creditors) and equity participation, offering a potentially enhanced return compared to liquidation.
The restructuring also positioned the Company to pursue a new reverse takeover opportunity, with an agreement in principle reached to acquire a US‑based energy business, demonstrating the ongoing value of the listed platform.
Testimonial
Our client was delighted with the outcome, and sent us this testimonial:
“It’s been a pleasure working with Antony Batty & Co on our CVA, and especially John Baalham. Their expertise and painstaking efforts on our behalf were fundamental to the successful completion of the process.”
Richard Horwood, Director, Electric Guitar PLC
Summary
This case demonstrates the effectiveness of a Company Voluntary Arrangement (CVA) as a restructuring tool for listed companies facing acute financial distress.
By combining a debt‑for‑equity swap, targeted funding, and stakeholder alignment, Electric Guitar PLC preserved its listing, eliminated legacy liabilities, and created a platform for future growth, delivering a significantly better outcome for creditors and shareholders than liquidation.
Contact us for more details on the use of Company Voluntary Arrangements
Antony Batty & Company has considerable expertise in supervising CVAs for all types of companies, including listed companies as in this case study.
Take a look at our main CVA page for more about how they can be used to restructure an insolvent company and help return it to profitability.
Contact us or call us on 0208 088 0633 for more details on this specialist area of insolvency. The initial discussion is FREE.
Frequently Asked Questions About Company Voluntary Arrangements (CVAs)
What is a Company Voluntary Arrangement (CVA)?
A CVA is a legally binding agreement between a company and its creditors that allows the business to compromise its unsecured debts and continue trading or, in the case of a listed company, preserve its corporate structure and listing.
Can a listed company enter into a CVA?
Yes. Electric Guitar PLC is an example of a listed company that successfully restructured through a CVA while preserving its AIM listing.
Why would a company choose a CVA instead of liquidation?
Liquidation would typically result in the loss of the company’s listing and lower returns to creditors. A CVA can preserve value, maintain the corporate vehicle, and provide a platform for future investment.
Do creditors have to approve a CVA?
Yes. A CVA requires approval from creditors and shareholders. In this case, the CVA for Electric Guitar PLC was approved without modification.
What outcomes can a CVA achieve?
Depending on the circumstances, a CVA can compromise unsecured liabilities, support balance sheet restructuring, preserve a listing, and create a viable structure for new investment or future acquisitions.
