CVA for all business

A company voluntary arrangement (CVA) is not just for large corporates but can be used by all companies

Poundstretcher is the latest High Street name to consider a CVA (company voluntary arrangement) as reported by Sky news . This is to alleviate its COVID-19 trading woes, following on from the Administrations of Monsoon Accessorize, Oasis, Warehouse and Cath Kidston.

Last week we reported that Hotel chain Travelodge was launching insolvency proceeding in the form of a CVA plan, in a move to cut rents by 40% over the 18 months and save 10,000 jobs. The company is now reportedly locked in a battle with landlords after it refused to pay rent for the second quarter. Just a handful of the company’s 564 hotels have remained open during the pandemic.

To the uninitiated it may seem that big corporates are flexing their power to force landlords to bow to their will. In simple terms however they are utilising legislation that is available to every business. Landlords and tenants can restructure using this process as discussed in our article ‘Landlord insolvency

The procedures of the CVA and Administration are great tools for an insolvency practitioner to use when faced with a substantially viable business that is drowning under huge and unsustainable debt burdens. It’s not just for famous names. It can work for businesses of significantly less turnover where there is a cash generative entity to be saved.

We regularly use these options, where appropriate, to provide a sustainable business with the breathing space it needs to stabilise. It will mean compromise from creditors, in return for payment from future profits in the case of a CVA. But that will be better than the alternative of a possible nil return in a liquidation.

If you are not a High Street brand but you are struggling and you feel you can get through this tough time, if given time and space to do so, then contact us for a no obligation conversation.

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