Working closely with our City contacts, Antony Batty and Partners have developed a niche Company Voluntary Arrangement aimed at restoring solvency to AIM listed companies whose shares have been suspended following the insolvency of the Group or its subsidiary companies.
How a Company Voluntary Arrangement for an AIM Listed PLC Works
Typically, following insolvency, the AIM listed company’s only asset will be its investment in its insolvent subsidiaries, which will generally be worthless.
Under these circumstances, a CVA is proposed to creditors and members, whereby creditors are invited to swap their debt for new shares in the company. If these proposals are accepted, we work with investors who then form a new Board and invest working capital in the company such that it is returned to solvency and the shares are listed.
The Company Voluntary Arrangement Leads to a Better Outcome than Liquidation
Once the company is returned to solvency, it is then known as an investing company which is attractive to companies seeking an AIM listing. This is because a listing can be gained by reversing into an investing company rather than the uncertainly of a listing via an Initial Public Offering.
The aim is to achieve a liquid market in the shares so that creditors and the old shareholders have a prospect of some recovery. The Company Voluntary Arrangement process reduces the scope of due diligence needed by any new investor or company seeking a reverse, as all pre-CVA debts are bound by the CVA, including debts which the company was not aware of at the time of the CVA, for example employee injury claims.
The only alternative to such a CVA would be the Liquidation of the holding company which would result in no recovery for creditors or shareholders. In other words, the CVA approach leads to a better outcome.
Contact us for Help and Advice With Company Voluntary Arrangements for AIM Listed PLCs
We regularly assist with reconstructions using this type of CVA. Two recent examples were DLM Plc and Tricor Plc, where we acted as Nominee and Supervisor of a “debt swap” Company Voluntary Arrangement, after both were re-listed on AIM.
