Successful CVA for Airport Lounge Business

Company Voluntary Arrangement (CVA)

| November 3rd 2021

More Case Studies by Julie Palmer

Updated: 3rd November 2021

Successful CVA for Airport Lounge Business

Background

Prior to the Covid- 19 pandemic, the group was an award-winning successful airport lounge business, operating across 13 sites in the UK and Australia. Following the worldwide restrictions on travel as a result of the pandemic, the group accumulated a bank debt of £10m, Private Equity sponsor debt of £18m, lease and other guarantees which ran into several millions of pounds. Coupled with a complex group structure, the situation was becoming untenable.

Work Undertaken

Our team of specialists worked with all stakeholders to develop a Company Voluntary Arrangement (CVA) strategy where key parts of the Group were ringfenced (e.g., guarantees given in relation to underperforming divisions of the Group). New funding was injected to support the performing divisions of the Group through a Covid recovery plan, whilst strategic sale options were explored.

As part of the CVA strategy, the Private Equity sponsor wrote off significant debt and the bank participated in the voting process. This is understood to be the first ever instance of a clearing bank voting in a CVA by valuing their security.

Outcome

We assisted the Group in their sale strategy post CVA which culminated in two sales (Australian sale was completed in May 2021 and the UK sale completed in July 2021). This resulted in the successful early completion of the CVA, and a repayment of the bank bridging facility and a significantly enhanced recovery on their £10m versus the alternative faced at the start of the process.

The sale processes were particularly complicated as there was a need to decouple various commercial agreements, arrange for various landlord approvals, and deal with warranty arrangements.

We are now in the process of finalising the wind down of the various legacy companies which were not acquired in the process.


About the author

Julie Palmer

Regional Managing Partner

Meet our Team of Experts

Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.

Julie is a member of the Insolvency Practitioners Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.

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