The Situation

The directors of a multi-site retail business approached us when rising costs, changing consumer behaviour and an inflexible property portfolio were placing significant pressure on cash flow and profitability.

Despite these challenges, the business retained a strong brand, loyal customer base and several profitable locations. However, a number of underperforming stores and long-term lease commitments were creating an unsustainable cost base.

Recognising that decisive action was required, the directors sought professional advice before creditor pressure escalated further. Without intervention, the business was likely to face formal insolvency proceedings, administration or liquidation.

Our Approach

Following a detailed review of the business, store performance, lease obligations and future trading forecasts, we concluded that a Company Voluntary Arrangement (CVA) offered the best opportunity to preserve the viable core of the business while delivering a better outcome for creditors than liquidation.

A CVA is a formal business restructuring process that enables a company to continue trading while reaching an agreement with creditors to address financial difficulties.

Our strategy focused on three key areas:

Reshaping the Store Portfolio

We identified underperforming locations that were no longer commercially viable and developed a structured plan to exit those sites. This enabled management to focus resources on profitable stores with stronger long-term prospects.

Reworking Lease Commitments

Working closely with landlords, we negotiated revised lease arrangements that better reflected current trading conditions. This reduced fixed overheads and provided greater flexibility for the future.

Stabilising the Business

The Company Voluntary Arrangement provided vital breathing space, allowing the business to reduce costs, improve cash flow and continue trading while implementing operational improvements.

Protecting Jobs and Preserving Value

While some redundancies were unavoidable following the closure of loss-making stores, the restructuring protected 449 jobs that would otherwise have been at risk had the company entered liquidation.

By preserving the viable core of the business, the CVA enabled hundreds of employees to remain in work while protecting valuable customer relationships and brand value.

Creditor Support

The proposal received overwhelming backing from creditors, with more than 95% by value voting in favour of the arrangement.

This significantly exceeded the statutory approval threshold and demonstrated strong confidence in both the restructuring strategy and the future prospects of the business.

The Outcome

The Company Voluntary Arrangement delivered a substantially better result than the likely alternative of liquidation.

As a result:

• The business continued trading as a going concern
• A profitable core portfolio of stores was retained
• Fixed property costs were significantly reduced
• Cash flow and operational stability improved
• 449 jobs were protected
• Customer relationships and brand value were preserved
• Creditors achieved a better return than would have been possible through liquidation

Most importantly, the business was given a realistic opportunity to rebuild on a sustainable footing and secure its long-term future.

Why Early Business Insolvency Advice Matters

This case demonstrates how businesses facing financial pressure can often be rescued when action is taken early.

Many directors assume that insolvency inevitably leads to liquidation. However, where a business remains fundamentally viable, a Company Voluntary Arrangement can provide an effective route to business recovery by addressing historic liabilities, reducing costs and creating a platform for future growth.

With the right insolvency advice and restructuring strategy, it is often possible to:

• Protect jobs and preserve value
• Improve outcomes for creditors
• Reduce financial pressure on the business
• Avoid company liquidation
• Restore long-term viability

Seeking professional insolvency advice at the earliest opportunity can significantly increase the options available to directors and improve the likelihood of a successful turnaround.

If you would like to discuss your options please get in touch today on 0116 2994745 or email situl.r@springfields-uk.com

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