Successful Company Voluntary Arrangement for Chalfont Hotels
“John Baalham from Antony Batty very patiently guided, advised and generally helped us get this over the line and resolved, which is a great relief”.
When a business become insolvent, our first aim is to see if we can save it (or parts of it) by using a restructuring/turnaround procedure, such as an Administration or a Company Voluntary Arrangement to produce a better return for Creditors than a Liquidation would. This testimonial is from a client for whom a CVA was deemed the most appropriate insolvency process for their Company, Chalfont Hotels, and we are grateful for their kind words.
“We ran a pub and at the end of our lease because we wanted to become free of tie, the landlord declined to renew the lease, preferring instead to take it in house. That left us with no viable business going forward, however, we had a number of creditors with outstanding debts but not enough funds to pay all their money back. As directors wanted to maintain our business reputations each having a number of directorships but above all else ensuring that creditors received as much of their outstanding debt back as possible, so we were advised to start a CVA, managed by John Baalham from Antony Batty & Company.
Not long into that process, my co-director and finance director sadly died, making the process significantly harder. John very patiently guided, advised and generally helped us get the CVA over the line and resolved, which is a great relief.”
Peter St. Lawrence (Director – Chalfont Hotels)
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Background to the CVA
Chalfont Hotels was formed on 30th May 2013 and took over the lease of an existing pub as its premises from the landlord, another pub company. Sales were good for several years, with income coming from three revenue streams – accommodation, liquor sales and food sales. A significant problem in delivering profitability, however, was the ‘tied’ nature of the beer sales, whereby the business was obliged to buy its beer at artificially inflated prices from the landlord.
When the lease came up for renewal, the directors sought to commence a new lease under ‘Market Rent Only’ conditions, with beer being purchased free of tie. This resulted in the landlord terminating the lease, citing ‘disrepair’ and ‘own use’ as the grounds, whilst also seeking a significant sum to cover dilapidations’ expenditure.
As a result, the premises were handed back to the landlord in January 2020. With no on-going business and pressure building from Creditors, the directors approached Antony Batty & Company, with the recommendation being that a Company Voluntary Arrangement was considered. This recommendation was accepted by the directors, and Antony Batty was appointed as the Nominee to the CVA proposal on 9th April 2020.
Why was a CVA Proposed?
Four options were available to the directors:
- To allow the Company to proceed into Compulsory Liquidation, following a petition from a Creditor.
- For the members to pass a resolution for the voluntary winding up of the Company through a Creditors Voluntary Liquidation.
- To appoint an Administrator.
- To enter a CVA with the Creditors.
The key reason for the recommendation of a CVA was that it would provide Creditors with a better return than they would receive on Liquidation.
The CVA proposals were approved by Creditors and Antony Batty was appointed the Supervisor in June 2020, with John Baalham managing the day-to-day process.
A successful outcome and the Release of the Company from the debts to its Creditors
The CVA was formally concluded in October 2021 with the total dividend being 17p in the £. This was below the target dividend of 20p in the £, owing to an unexpected claim from a Creditor and an additional claim from the Redundancy Payments Service.
The 3p difference was not thought material enough to propose a variation to creditors to accept this slightly lower amount. No objection was raised by any of the creditors and it was also discussed with the majority creditor, HMRC. The conclusion was that it deemed the most sensible and reasonable approach to take.
We Have Run Over 170 Successful Company Voluntary Arrangements
Our team of Insolvency Practitioners have supervised Company Voluntary Arrangements to help over 170 companies that have encountered short-term difficulties. Click here to see a video that looks in more detail at the benefits a CVA can bring.
Contact us for More Information on a Company Voluntary Arrangement
If you believe your company, or one of your clients, would benefit from a Company Voluntary Arrangement, contact us or call us on any of the numbers, below, for a FREE and confidential initial discussion.
- London: 0208 088 0633
- Brentwood: 01277 554002
- Salisbury: 01722 512001
- Croydon: 0208 088 1899
- Bournemouth: 01202 923009
- South West & Wales 01173 250567
Also, K&W Recovery, trading as Antony Batty and Company, Thames Valley:
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