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Tuesday, 22 March 2011

Oddbins CVA proposal published - Creditors meeting on the 31st March

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!

1 comment :

  1. Well Keith it is a bad call to keep you in work to help a Company like this.
    As a supplier from down under I would sooner see the company go down into the hole. Their staff etc like us will take a significant financial hit but what may emerge from the ashes should be a lot better than a CVA driven SOS.

    ReplyDelete

Many thanks for your comments. If you have a private business problem and you want advice give us a call on 0800 9700 539 or email me at keiths@companyrescue.co.uk. If you are a professional advisor with a troubled client, please suggest they visit www.companyrescue.co.uk or contact me as above.

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