Financial Advisory
Opusllp
Full Credential Description
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 situation was precarious, primarily due to a substantial 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, jeopardizing its financial stability. 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, allowing the company to make regular contributions from its ongoing turnover while ensuring a minimum dividend of 50p to creditors, which included significant claims from HMRC and damages related to the loss-making contract. 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 company to repay the inter-company debt of approximately £1.4 million in full. The CVA was further adjusted to accommodate the realities of the situation, including the acceptance of the damages claim without the need for a costly adjudication process. By early 2022, the CVA was successfully completed, with creditors receiving a first and final dividend estimated at 29p in the pound. This outcome not only ensured the survival of the company but also preserved jobs, demonstrating the effectiveness of the CVA provisions and the flexibility afforded by the creditors in adapting to changing circumstances.