What Insolvency advice is required in the AIM Listed arena? Is it highly specialised?
The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange (LSE) that is designed to help smaller Companies access capital from the public market. AIM listed Company insolvencies require the insolvency practitioner to have specialist expertise.
Antony Batty, one of our Licensed Insolvency Practitioners, acted as Supervisor of a Company Voluntary Arrangement (CVA) which reorganised AIM listed Orchard Furniture PLC in 2000.
Since that time he has “written the book” on this highly specialised area of insolvency work and has assisted over 20 AIM listed Companies relist, as these client comments demonstrate:
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How are CVAs used in the AIM Listed Company Sector?
A CVA is used to restore solvency to AIM listed Companies whose shares have been suspended, often following the insolvency of the group or its subsidiary Companies. Typically, the listed Company’s only asset will be its investment in its insolvent subsidiaries which will generally be worthless.
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 re-listed Company is then known as an Investing or Shell Company, which is attractive to other Companies seeking an AIM listing, as a listing can be gained by reversing into the existing shell rather than the uncertainly of a listing via an Initial Public Offering. The goal is to achieve a liquid market in the shares so that creditors and the old shareholders have a prospect of some recovery.
The only alternative to such a CVA would be the Liquidation of the holding Company which would generally result in no recovery for creditors or shareholders.
Recent examples were Digital Learning Marketplace Plc, Tricor Plc, and Silvermere Energy PLC, where we acted as Nominee and Supervisor of “debt swap” CVAs prior to these companies being re-listed on AIM.
