What Does Going Into Administration Mean?

Administration followed by a CVA

in What Does Going Into Administration Mean? What is a CVA (Company Voluntary Arrangement)?

Administration followed by a Company Voluntary Arrangement What would be the purpose of using an administrator to propose a CVA? The answer is control over aggressive creditor actions, protection from landlord actions and a moratorium to prevent future legal actions before a CVA can be proposed. Given that it can take several weeks to build a viable CVA proposal sometimes creditors may already have started legal actions such as issuing a winding up petition or enforcement action.So, it may be necessary to put the company into administration to protect it whilst the detailed forecasts and CVA proposals are prepared and to discuss the scheme with the bank and other critical creditors. Once a viable CVA scheme is ready it becomes the administrators CVA proposals not the directors. So, in effect, the CVA can be used as a method of exiting an administration.The main reason your business might want to exit an administration is for reasons of cost and control. An administration is a powerful but expensive insolvency procedure. Powerful in that it can allow the business to trade and be sold if possible in a very short time scale if necessary. Expensive though, because the administrator has to run the company in place of the directors and has complete control of all the monies in and out of the business. They will also look at how to restructure the finances and one possible option is a CVA.If a buyer cannot be found but the business is viable and it will maximize the interest of creditors then a CVA is an acceptable exit strategy. The CVA will hand back the business to the directors and the insolvency practitioner and his / her team will continue to monitor the CVA as supervisors.So how does it work?The IP, once appointed by the board, will put together an administration proposal and get external asset valuations and statement of affairs drawn up. After getting floating charge holders consent, the IP will make an application to the court stating the purpose of the administration. The company enters administration and all legal actions are stayed by the moratorium in place. The IP then calls a creditors meeting to report on his proposals for the administration and then they will prepare the CVA. The CVA will then be published to creditors (a minimum of) 14 days before a meeting is scheduled to vote on the proposal. If the CVA is approved by creditors the CVA starts. 28 days later the IP applies to the court to end the administration and usually becomes the supervisor.The directors then get on with running the company under a CVA. Of course, they can exit a CVA early as well if they want. We have had a number of our clients do exactly that.

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Administration followed by a CVA

Oasis and Warehouse likely to go into administration

in A guide for redundant employees in administration or insolvency situations News What Does Going Into Administration Mean?

17/06/2020Almost two months after Hilco Capital secured a deal to buy the Oasis and Warehouse brands, saving it from administration, we hear that the Oasis and Warehouse online businesses and their associated intellectual property would be bought by Boohoo.Boohoo has a market value of almost £4.7bn. Its portfolio of brands now moves to 9. Just last month it struck a deal to buy the minority interests in women's fashion retailer, PrettyLitttleThing.30/04/2020Today we hear that Hilco Capital, the former owner of HMV, has agreed a deal with administrators regarding high street fashion chains, Oasis and Warehouse.Hilco has agreed to buy both brands, along with Idle Man and the stock from their many outlets across the UK. So, the intellectual property assets and some stock has been sold.However, Oasis and Warehouse Group's stores are not included in the deal, meaning immediate redundancy is the case for over 1,800 staff. The staff have been told no statutory redundancy pay will be received.Since, April 22 the retailers stopped trading online because of the “rising costs of fulfilling online orders and associated logistical challenges, after appointing Deloitte as administrator the previous week.''Joint administrator of Deloitte, Rob Harding explained the sadness of having to said:  “It is with great sadness that we have to announce a sale of the business has not been possible and that we are announcing so many redundancies today. This is a very difficult time for the Group’s employees and other key stakeholders and we will do everything we can to support them through this.”15/04/2020Addressing the rumours from yesterday, it is now confirmed that high street fashion chains, Oasis and Warehouse have fallen into administration. Deloitte are the appointed administrator.92 stores and 437 concessions are affected, all these being in UK. 200 jobs have been lost with immediate effect. Around 1,800 staff, including those on the shop floor, in concessions and those at head office, will be furloughed.The brands will continue to be sold online, whilst the administrators work on finding a buyer.Chief Executive of Oasis and Warehouse, Hash Ladha explained the situation as unpredictable, shocking and difficult for all.Joint Administrator at Deloitte, Rob Harding said how the retail industry as a whole was suffering devastating effects from coronavirus."Despite management's best efforts over recent weeks, and significant interest from potential buyers, it has not been possible to save the business in its current form."It is thought that there will be interest from bidders in buying the businesses but of course with the current economic situation, it is all very uncertain.14/04/2020Oasis and Warehouse look likely to be the next casualties of the coronavirus crisis.  Sky News has reported that they are about to file an intention to appoint administrators at Deloitte, with an announcement expected later on Tuesday or Wednesday.Three weeks ago The Oasis and Warehouse Group, which is owned by the failed Icelandic lender Kaupthing, was approached for a possible sale from an unnamed buyer.  Kaupthing has managed to offload some of its brands already such as Karen Millen and Coast to Boohoo.Although there is understood to have been strong interest in a deal, the uncertainty caused by the coronavirus pandemic is thought to have made a solvent sale impossible to conclude.Both retailers support approximately 2300 jobs.The difficulty facing many retailers is stark. The High Street has already been under pressure and the creditworthiness of these companies has made them unlikely to be able to draw on the government help with respect to loans.  Yes, they can benefit from the furlough arrangement and the business rates but with high rents and creaking balance sheets it is likely that many won't be able to make it through this crisis.

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Oasis and Warehouse likely to go into administration

Administration Flow Chart

in What Does Going Into Administration Mean?

See here some unique Administration flowcharts for your free use! They explain in English what happens in an Administration process where a pre-pack is used or where CVA follows.administration-followed-by-cvaAdmin Pre Pack Flowchart - PDFSo would you now like to know why Admin pre-pack selling the business to directors is favoured by Insolvency Practitioners BUT, not necessarily by the clearing banks? Call Keith Steven on 07833 240747 to find out more and how a CVA can achieve huge change while leaving YOU in control!

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Administration Flow Chart

Another customer safe from administration and in a CVA

in What Does Going Into Administration Mean? What is a CVA (Company Voluntary Arrangement)?

A recent customer admitted other potential advisors were pushing for them to go into a pre pack administration, but with KSA's help, this business is in a CVA and will continue trading and returning money to creditors, including paying back a proportion of their £500k of tax liabilities to HMRC.We were sent the following email:All, I just wanted to thank you all for your assistance with the CVA preparation. With 100% of creditors voting in favour this is a testament to your experience and process in putting these together. The last few weeks has been a nerve wracking time and timing has been close to the wire, but the end result means that we are now well positioned to execute our plans going forward to the benefit of all. In deciding to go with KSA we had numerous other providers who were either cheaper or pushing a pre-pack route. You have delivered what you set out and certainly a much better outcome than administration. Marie, a special thanks for your efficient and calm handling of all the issues that have arisen, and Andrew – your “mother of all spreadsheets” will now double as our operating budget for next year. Finally, if you ever have any prospective clients who require a reference, I would be happy to talk with them. Regards

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Another customer safe from administration and in a CVA