There are three purposes for an Administration, but the primary purpose is to rescue a Company’s business, either in whole or in part, as a going concern. However, this objective is rarely achieved; instead, Administration is normally used to ring fence a company so that its business and assets can be marketed for sale in an orderly way. This article details how we successfully rescued Iconic Labs PLC , through the use of a Company Voluntary Arrangement, which is the third listed company that we have helped exit Administration in such a way. Iconic Labs PLC is listed on the main market of the London Stock Exchange(“LSE”).
Our appointment as Joint Administrators
Antony Batty & Hugh Jesseman were initially appointed as Joint Administrators of Iconic Labs PLC in June 2021 by a creditor who had the benefit of a Debenture over the Company’s assets, which included a qualifying floating charge. The appointment arose due to a dispute between stakeholders in the Company and was against the Board’s wishes, as such it was termed “hostile.” The appointment was subsequently challenged through the Courts.
Due to Antony Batty’s experience dealing with listed companies, he was of the view that if the stakeholders could resolve their disputes, a Company Voluntary Arrangement (CVA) could be used to restore solvency to the Company and achieve a compromise with all creditors. In fact, the suggestion and prospect of a CVA acted as a catalyst to the stakeholders to resolve their differences.
CVA proposals were put to creditors and members
After protracted negotiations in August 2022, CVA Proposals were put to creditors and members which provided for Preferential creditors to be paid in full and for unsecured creditors to convert their debt into shares in the Company. Given the Company was listed on the LSE, it was anticipated that the shares issued may have a future value that could be realised.
The CVA was approved and accordingly in November 2022 the Joint Administrators were able to exit the Administration and return control to the Board. The Board is now working to arrange for the trading suspension, which was put in place on Administration, to be lifted.
Antony Batty commented:
“I am delighted that we were able to assist the Company and hope that creditors and shareholders will now benefit from our work. I would like to thank all concerned, in particular the Board of the Company.”
The value of using a Company Voluntary Arrangement in such cases
A CVA can be used, with or without Administration, to restructure listed companies by restoring solvency such that the company and its listing, which can have significant value, can be preserved for the benefit of all stakeholders. The insolvency advice required in such cases is highly specialised and is an area we have considerable experience of.
We also have very close connections with funders who will provide rescue and recovery finance in such situations.
