Written ByKeith Steven
Managing Director
Keith is the Managing Director of KSA Group Insolvency Practitioners which has been established for 25 years. The company has undertaken more CVA led rescues than any other firm. Read our case studies to see how.
I am worried about the creditors’ meeting for my company’s CVA. What should I do to prepare and what is likely to happen? Will anyone attend?
The meeting is chaired by the advisor or an insolvency practitioner (IP). Creditors are sometimes represented by professionals from other insolvency firms if the debt is substantial. The aim of the meeting is to allow the creditors to question the director’s proposals; however it is NOT a place for settling disputes. The creditors meetings are normally held via video conferencing unless 10% or more of the creditors wish it to be held at a physical location.
At the meeting, the creditors will vote on the proposed restructure of the company debts. If there is a majority vote of 75% by value of the total value of unsecured creditors at the meeting (whether in person or by proxy) vote in favour. A second vote, not including connected creditors, is taken and provided that not more than 50% of unsecured creditors vote against the proposal, it is approved. Remember that the bank or other secured creditors are not affected by this process. For an example of votes at a creditors meeting click here
Directors often worry about the creditors meeting.
However, if the work has been done thoroughly and all the creditors are thoroughly informed of what is happening before the CVA is filed at court, then there is no reason for concern.
In practice, it is rare for creditors to turn up. Instead, if they want to vote yes, they are more likely to send in a proxy. In our CVAs, the Voluntary Arrangement Service (VAS) which represents HMRC, will generally be supportive of viable proposals that are well built and show proper care with attention to detail. Given that the VAS often represents the largest votes, then we ensure they are comfortable with the CVA process very early in the cycle of events. However, VAS need to be confident that you are going to comply with your obligations. Therefore a poor record of filing returns on time and indeed even late filing of director’s Self Assessment for tax will dent that confidence. Proper communication with creditors is a vital part of KSA’s strategy for helping you build a CVA deal.
Get on, run the business and make some money. Remember that once the company is in a CVA, the directors have to make it work and keep up any payments to creditors. Two or more failures to pay the dividend will deem the arrangement to be a failure and the company will be wound up. If you are having any problems meeting the payments or there is a change in your circumstances, let the supervisor know as soon as possible. Another creditors meeting could be held with further modifications being put to creditors but be warned they are likely to be less accommodating second time round.
Property in receivership – LPA receivers explained
I have heard that receivers can be appointed over property... What is property receivership and how does it work? We get asked questions related to property or LPA receivership by a number of enquirers.So who is a property receiver? How can a property go into receivership? A Fixed Charge Receiver or an LPA receiver (acting under the Law of Property Act 1925) are the more precise terms. A fixed charge receiver is normally appointed by a lender who has a mortgage or charge or other security over a tangible asset most normally a property or property portfolio. They have the power to sell property and collect rent. They will have financial control over the day to day running of the property to ensure that the debt is paid. The receiver need not be an insolvency practitioner and is more normally a specialist surveyor. How is the receiver appointed? They can be appointed very quickly and inexpensively. The lender can simply use an appointment document (reflecting the conditions of the loan) after the borrower has failed to pay on demand, or at the end of a fixed term, the monies due. In the event that the lender's security contains a floating charge over the asset or a substantial part then the floating charge element needs to be excluded from the appointment. In the case of a floating charge an appointment of an administrative receiver or an administrator is the requisite option and they must be a licensed insolvency practitioner. A fixed-charge receiver, unlike an administrator does not have the statutory powers to summons, investigate and demand information from directors and other relevant parties. What does the receiver do? Under the Law of Property Act 1925 they have the power to sell the property and collect rent on behalf of the lender. For more technical details of the powers of an LPA receiver please refer to the relevant page on the insolvency services website Duties and Liabilities of the LPA Receiver The receiver has a primary duty to the lender but they need to take into account the interests of debt guarantors and other third parties. The appointment notice needs to be filed at companies house. What if the company is already insolvent? Once a business is in a formal insolvency situation, such as administration or the grant of a moratorium pending the preparation of a CVA or IVA, this will restrict the appointment of a fixed charge receiver. This is because consent will be required of the insolvency practitioner or the court.
Read
Purchasing a loss making business
An example of a client enquiry RE purchasing a loss making business
Read
KSA Group Seminars
Where can I learn about how to save my client's businesses? KSA Group Seminars!! At KSA Group we are passionate about saving companies and feel that education is the key for business people and their advisors to ensure that good viable businesses are not thrown away. There is much ignorance about the rescue mechanisms available, such as informal turnaround, or company voluntary arrangements, and it is often the case that business people leave it too late to act to solve cashflow problems.What is more, saving a viable business should be an aim of many company's advisors. Many of these seminars are aimed at advisors that will learn that they can keep a client and be renumerated for helping to bring about the turnaround.We have already held seminars in London, Edinburgh, Birmingham, Nottingham and Crawley to spread the word. If you want to attend any of these events and would like to have details of the next one then you should get in touch.Upcoming Seminar is to be held in Leeds on the 20th of June. CVA's explained and debated. Please get in touch with robertm@ksagroup.co.uk if you want to attendNext Seminar is Turnaround from a Local, National, and International Perspective to be held in Reading on June 12th.Latest Seminar to be held was CVA versus Pre Pack debate on the 8th May 2013 in London. Read the review of the event published in Accountingweb.co.ukBromley 18th April 2013 - The Kent Triple A event was well received and it was interesting to hear HSBC's approach to lending requests from small businesses. Seminar in Nottingham on the 19th March 2013This CPD event was a great success with over 30 people in attendance. 3 Seminars that we held in Birmingham, Crawley and Bristol were a great success. Seminar Edinburgh 19th February 2013The meeting was addressed by a lawyer, a funder and a turnaround professional, who - drawing on their considerable experience in the field of restructuring - explained some of the options available to distressed companies in order to survive in the current tough economic conditions. The event was a sell outDate: Tues 19 Feb, 6pm Venue: Gillespie Macandrew LLP, 5 Atholl Crescent, Edinburgh EH3 8EJKSA Group along with HSBC, Turnaround Management Association (UK), and Advantage Business Partnerships hosted and sponsored free evening Seminars in Birmingham and West SussexSee details and a review of the Birmingham EventSee details and a review of the West Sussex Event KSA Group are Gold Sponsors of the Turnaround Management Association UK and we will be sponsoring events throughout 2012/2013Attendees at these events will get our our USB toolkits with hundreds of pages on how to save companies.KSA Group are keen to explain the benefits of the CVA mechanism to as wide a range of people as possible. As such, we were presenting at the Turnaround Management Association in Birmingham which was attended by 43 people. You can see the video of Keith Steven presenting below.We also aim to bring the CVA mechanism to the attention of professionals in Scotland. We held a seminar in Edinburgh on the subject which was well attended. In 2011 there were a total of 14 CVAs done in Scotland compared to 765 in England and Wales....Recent statistics out has shown that only 1 CVA was approved in the first quarter of 2012.There are some legal issues as to why it is harder to get a CVA approved in Scotland but the differences do not account for the huge disparity.
Read
CVA Seminar in Scotland
Is the Company Voluntary Arrangement or CVA underused in Scotland? Seminar well attended on the 12th OctoberA special thanks to all those who came along to hear Keith Steven of KSA Group talk about CVAs and their application in Scotland. Comments were that it was astonishing that only 6 or 7 CVAs are done each year in comparison to 600+ in England.The total number of CVAs filed in the UK is around 600 - 700 every year. In Scotland it is around 6 pa. We normally do 4-5 of them! CVAs allow a company to continue to trade by cutting costs quickly, can save jobs and in most cases gives a better return to creditor than an aggressive liquidation or pre-pack.KSA Group propose the highest number of CVAs in the UK and we have a success rate of over 90% creditor approval. As such, we would like to involve Scottish professionals in promoting this excellent rescue technique.The advantage to corporate advisors, accountants or lawyers of the CVA mechanism is that of business continuation. Your client can still remain your client once they are in a CVA and not be taken over by an insolvency practitioner which would be the case in administration. Also as a condition of all of our CVAs, monthly or quarterly management accounts are required to be produced to the CVA Supervisor, will provide additional work for your firm. We will also need help in putting together the forecasts in a CVA which is work that KSA Group will pay you for.If you were unable to come along and would like to attend the next one then please call Robert Moore on 07584 583884 or email robertm@ksagroup.co.uk. All attendees will receive a full course manual and our unique USB online insolvency toolkit free to take away which in itself is worth £99.Contents of the Insolvency Toolkit available on USB
Read
Administration Flow Chart
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!
Read