8th November 2023
Today it has been reported that the virtual meeting for creditors to vote on the potential of a CVA for Squibb Group has been delayed. It was scheduled to take place tomorrow, but now will occur on 21 November 2023.
1st November 2023
The construction publication, The Enquirer, has seen a copy of the proposed Company Voluntary Arrangement (CVA) that Squibb has put to its creditors as it seeks to restructure its debts.
The proposals by Begbies Traynor show that the company owes £23.3m to over 300 creditors.
Unsecured creditors in the supply chain are owed £13.8m.
The CVA proposes a dividend to its unsecured creditor of 65p in the pound.
The five-year CVA deal would see Squibb make monthly payments of between £100,000 to £160,000 as it continued trading.
The company had a time to pay arrangement with HMRC last year for extra time to pay tax arrears of £4.4m. However a further request or an extension was rejected and HMRC have issued a winding up petition that is due to be heard in December. It should be noted that HMRC are now secondary preferential creditors and are entitled to 100p in the £1. CVAs will try and pay HMRC a higher rate in the £1 to secure their support.
Squibb has raised extra funds by selling and leasing back its headquarters raising £8m. In addition the Squibb family has loaned the business £4.2m.
The CVA document states: “The Company is now in a position to move forward but requires creditor support with existing debts and does not want to proceed into liquidation or administration which
would serve to terminate all contracts and result in a worse outcome for creditors as a whole.
“The Company is already the subject of an HMRC winding up petition. As a result, it is likely that the Company will be wound up by the Court if the CVA is not approved. This Proposal for a CVA is being presented to creditors as an alternative to the Company being put into liquidation.”
75% or more by value of creditors need to agree for the CVA to pass.
KSA Group says that a CVA gives a company a fighting chance of survival and invariably gives a better return to creditors than that of liquidation. However, they can be difficult to construct and the fundamentals of the business may need to change to ensure its success. The secured creditors sit outside the CVA so it is important that the company can still pay these creditors in full going forward.