Blacks creditors vote through CVA proposal
The creditors of Blacks have today voted through the company voluntary arrangement (CVA) proposal, which sets out a financial compromise between landlords of the unoccupied stores and the company. To come into effect, a CVA has to be approved by 75% of creditors. In the event, the Blacks CVA was voted through by 98%.
The remaining creditors have not been asked to compromise financially but the landlords of the open stores have been asked to move to a monthly payment schedule for 18 months.
Richard Fleming, UK Head of Restructuring at KPMG and 'supervisor' of the CVA, commented:
"This is a pivotal moment in the turnaround of Blacks. Without the approval of the CVA, the company faced administration, putting 4,300 jobs and 291 trading stores at risk. The CVA agreement between Blacks and its creditors shows that a less destructive insolvency process is possible. As the third CVA of a large company agreed this year - and with the recent announcement on insolvency regime reform extending the moratorium protection afforded in administration to CVAs - we could well see CVAs becoming a viable and common alternative to administration.”
Brian Green, restructuring partner at KPMG and 'supervisor' of the CVA, added:
"The CVA of Blacks follows the JJB 'model' and, in very difficult circumstances, it provides landlords with a level of compensation for the termination of long lease obligations. While the recession continues to bite, it is important that companies work with their creditors to strike a fair balance between meeting their contractual obligations and protecting the healthy parts of the business. A CVA is the path of least destruction as the operational side of the business is protected from the destabilising effect of a full administration process.”
Blacks runs approximately 392 stores across the UK and Ireland, trading primarily as Blacks and Millets. As part of the CVA, the landlords of the unoccupied stores will receive a total compensation of £7.25m, which equates to approximately 6 months rent each. The company will also continue to pay rates until the leases are surrendered or forfeited in consultation with landlords.
Monday 23rd November 2009
-ENDS-
Notes to editors:
For further information on the CVA, please contact
Rachael Halliday, PR manager, KPMG: 0117 905 4373 / 07747 102909
rachael.halliday@kpmg.co.uk
Patrick Tooher, Head of Media Relations, KPMG: 020 7694 2597 / 07831 314671
Patrick.tooher@kpmg.co.uk
KPMG Press Office: 020 7694 8773
For further information on Blacks, please contact
Simon Rigby/Kevin Smith, Citigate Dewe Rogerson
020 7638 9571
About company voluntary arrangements (CVAs)
Where a company is experiencing difficulties in paying its debts, the directors can propose a company voluntary arrangement (CVA) whereby the company enters into a legally binding agreement with its creditors, such as their suppliers or landlords. In a similar vein to an individual voluntary arrangement (IVA), which gives an individual an alternative to bankruptcy, a CVA enables a company and its creditors to come to a compromise agreement and avoid an administration or liquidation. A CVA can provide a company with some breathing space to allow it to reorganise or restructure its funding and/or its operations with as little disruption to the day to day trading as possible, with the control of the company usually staying within the existing management.
About KPMG
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with 11,500 partners and staff. The UK firm recorded a turnover of €2.2 billion in the year ended September 2008. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 148 countries and have more than 113,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. KPMG International provides no client services.