FINANCIAL RESTRUCTURING

A turnaround will often need to be accompanied by a financial restructuring. CVR can advise companies through the process of raising or restructuring finance.

The main areas are as follows:

Debt-for-equity swaps

Often used when a financial restructuring needs to take place to put the company in a better position for long term success. Put simply, debt is exchanged for a predetermined amount of equity (or stock). The value of the swap is determined usually at current market rates but management may offer higher exchange values to entice share and debt holders to participate in the swap.

Rescheduling debts (possibly through the use of a formal arrangement under the Companies Act or Insolvency Act)

For example, a CVA is a legally binding agreement made between a company and its creditors – unsecured, trade and tax – which ‘ring-fences’ old creditor liabilities and allows a company to move forward.

This does not mean that the old creditors are written off in full, but depending on what is agreed with the creditors, a substantial portion of the old debt may be written off. More importantly, a timetable is agreed to pay the balance which does not starve the company of cash as it goes forward. Then the company can settle its new liabilities as and when they become due, and pay off the old liabilities or a proportion thereof out of future profits, in accordance with the proposal agreed in the CVA. For full details see also Rescue Procedures.

Sale of part of the business

It is possible that some companies may need to demerge elements of the business and assets. This is normally facilitated through a Members Voluntary Liquidation (MVL), in combination with a ‘section 110 procedure’, which can enable the separation of property assets and trade.

Assets can be transferred to new companies without cash transactions, and with no gains arising. The transfers can facilitate a sale of a trading business and the risk of trading businesses having a negative impact on property assets can be managed. For full details please also see our Corporate Simplification section.

Refinancing debt (including asset finance and invoice factoring/discounting)

CVR Global can help you with the following services:

  • Invoice Factoring

This facilitates a fast repayment against your sales ledger and provides finance, debt collection and ledger management services. There are many factoring companies which means that price is usually very competitive. We use our extensive knowledge of the funding industry to negotiate the best deal and put you in contact with the right funding company.

  • Invoice Discounting

Invoice discounting provides a fast and easy way to gain access to cash and still allows you to directly handle your own payments. Also, unlike factoring, most invoice discounting is undertaken on a confidential basis and therefore your customers do not usually know about the facility.

  • Asset Based Lending

Asset Based Lending (ABL) is a great alternative for companies without access to unsecured finance by using assets to invest capital back into your business. By securing a loan facility against an asset owned by your company and spreading the repayments over an agreed period of time you can improve the health of your cashflow.

  • Bank Funding

Contrary to popular belief, banks are not all the same. Our knowledge of the banking sector means we can guide companies to the lender who best fits the requirements of the company and its directors.

  • Alternative Finance

Obtaining funding outside of the traditional finance system, such as Peer-to-Peer lending, Crowd Funding and Equity Crowd Funding can be particularly suited to small and medium sized enterprises. We also can assist companies in raising funds from business angels, venture capital funds and private equity houses.

For further information on how we can assist you, please contact Matthew Fox at mfox@cvr.global