Financial Advisory

The case study focuses on a digital transformation and IT specialist based in London that faced significant challenges due to a major contract that was projected to incur heavy losses. By October 2018, it became evident that additional financial resources were necessary to complete the project and avoid severe penalties for non-delivery. The companys financial position was precarious, primarily due to a significant debt owed by an associated company, which was also its landlord. This debts repayment hinged on the successful sale of the property, and if the company entered liquidation, it risked a forced sale at a much lower value. To address these issues, Opus was engaged to guide the company through a restructuring exercise, leading to the approval of a Company Voluntary Arrangement (CVA) in December 2018. This CVA aimed to facilitate the sale of the property within a 12 to 18-month timeframe, with the company agreeing to make regular contributions from its ongoing turnover. The CVA stipulated a minimum dividend of 50p to be paid to creditors, which included significant claims related to the loss-making contract and tax schemes. However, the process faced delays, first due to protracted negotiations over the property sale and later exacerbated by the impact of the Covid-19 pandemic, which diminished interest in London commercial real estate. Consequently, the CVA was extended multiple times, with a final extension in November 2020 that set a long-stop date for the property to be auctioned if a sale could not be achieved. Ultimately, the property was sold in July 2021, allowing the repayment of the inter-company debt of approximately £1.4 million. Following this, the remaining issues regarding the contractual damages claim and the final dividend to creditors were resolved in December 2021, with creditors agreeing to remove the initial minimum dividend restriction to avoid the CVAs failure and the companys liquidation. By early 2022, the CVA was successfully completed, and a first and final dividend estimated at 29p in the pound was paid to creditors. This outcome not only ensured the survival of the company but also allowed it to continue trading and providing employment, demonstrating the effectiveness of the CVA provisions and the flexibility afforded by the creditors in adapting to changing circumstances.