People Businesses -Company Voluntary Arrangement for a media company - Case study
CVA - People business - Media Company - CVA Case Study
This case study details the actual circumstances of a Company Voluntary Arrangement (CVA) completed by us to a satisfactory conclusion in relation to a people business.
We were approached by a media relations company operating on a National basis (for the purposes of this case study let's give it the fictional name Media Movers (Devon) Limited) who wished to not renege on their liabilities to creditors. The directors had the option of closing down their existing company and having a re-start business. Since the business was a "people business" the value of the operation was not represented by physical assets but instead by the knowledge in the minds of the directors.
To maintain credibility the directors of Media Movers (Devon) Limited chose not to go down the phoenix company route but instead proposed a Company Voluntary Arrangement. Under that proposal the company paid monthly sums over a three-year period. At the conclusion of the CVA the creditors received a material dividend.
There were three very great advantages to the directors
- Firstly they improved their credibility by taking a step which was more expensive for them (but which gave them three years credit from their creditors).
- Secondly because the CVA was one under the 1986 Insolvency Act there was no advertising of the CVA's existence - consequently the fact of the CVA remains to this day unknown to many in the business community.
- Thirdly because the creditors received much more than they would have had the company been placed into liquidation
If you want more information on Company Voluntary Arrangements as they relate to people businesses please contact Chris Parkman.