Background to this CVA
Be Military Fit Limited was formed on 27 February 2018 following the acquisition of the business and assets of British Military Fitness after the previous owner went into Creditors Voluntary Liquidation. The business had over 11,500 members across c.120 parks, however, the membership was declining as rival competitors begun similar services across the UK.
By 2019, the membership had declined to 6,500, with operating losses of more than £2.7million. As a result, the business required substantial funding to survive, which was provided by a combination of secured shareholder loan notes and unsecured shareholder loans. However, after much discussion, it was deemed that the business was no longer viable and the directors, with the support of the loan note holders, decided to transition the business from an owned/ operated model to a franchise model.
The original business ceased trading when the company made the transition from owned/operated to the new franchise model. The Directors wanted to maintain their business reputations and ensure that creditors of the original business received as much of their outstanding debts back as possible.
After seeking advice on the situation of the original company, including input from Antony Batty & Company, it was determined that a Company Voluntary Arrangement would be a viable option, and would offer unsecured creditors a significantly better return with an estimated 12p in the pound compared to an estimated 3p in the pound were the company to enter liquidation. It was envisaged that the original company would be dissolved following the successful completion of the CVA.
The Outcome of the CVA
The CVA was successfully completed on 12th August 2021 with unsecured creditors achieving an even better dividend return than originally anticipated – approximately 16p in the pound – and the Company was released from the debts to its creditors that were covered by the terms of the Arrangement.
The CVA of the original direct operation business enabled “a restructuring project, designed to transform the outdoor fitness provider from a centrally-led company into a franchise business” to be undertaken. That process is now complete, with the iconic Be Military Fit brand at the forefront of what is now a successful and growing franchise business.
We Have Run Over 170 Successful Company Voluntary Arrangements
Our team of Insolvency Practitioners have supervised Company Voluntary Arrangements to help over 170 companies that have encountered short-term difficulties. Click here to see a video that looks in more detail at the benefits a CVA can bring.
When a business become insolvent, our first aim is to see if we can save it (or parts of it) by using a restructuring/turnaround procedure, such as an Administration or a Company Voluntary Arrangement to produce a better return for Creditors than a Liquidation would, and that is exactly what we achieved for Be Military Fit.
