Following the announcement that Oddbins is struggling with debts to HMRC and trade creditors it has published its proposals for a company voluntary arrangement or CVA
Creditors are owed sums totalling over £20m but the largest creditor is HM Revenue and Customs, which is owed over £8m. The majority of this will probably be for excise duty and it will be interesting if the Voluntary Arrangement Service will support the CVA.
The proposed dividend in the CVA is 21p in the pound which is quite low. However, this does reflect the difficult situation the company finds itself in as spending is cut back on the high street. The creditors meeting is on the 31st of March when Oddbins are hoping for a 75% by value of the creditors to agree for it to go through. Some creditors have been quoted that they support the idea of a CVA, however they want to see a real change in the business. They cite that the product mix is too diverse and they stock too many specialist wines.
Deloitte, which is handling the restructuring, estimated that creditors would receive 13.6p in the pound if Oddbins were put into administration.
As part of any CVA you must compare it with the outcomes in liquidation or administration and show that it produces a better result. This is what Deloitte have done although the uplift is modest.
How will the Landlords fare? The proposal means landlords will get 70% rent until Christmas 2012, at which point it will go back to its original level. This will give a valuable breathing space for the company and should allow it to close fewer stores although 39 stores are being closed on the 24th March 2011
If you are retailer struggling then take a look at our retailer rescue page and please get in touch. A CVA can be used for a retailer with only a few stores as well as hundreds!