Successful CVA of a former prosperous telephone fundraising business.

The challenge

Committed 2 Communications Ltd was a successful telephone fundraising business, primarily acting for national charities and formerly had a turnover of £5million. Following a period of media attacks on the charity sector, significant regulatory changes occurred which led to a drastic reduction in turnover. The company was left owing a significant amount in debts. Our team of One80 experts were initially introduced by the company’s lawyers to provide specialist advice on the cash flow position and options, and following the options review preceded in initiating formal proceedings.

The solution

The regulatory changes resulted in significantly reduced turnover whilst 60% of the company’s competitors closed and a considerable investment in compliance and transparency led to cash flow pressures. The company was left owing in excess of £1.2million. Due to the substantial amount of debt the company owed, it was imperative that we took swift action and decided on the best insolvency procedure which would ensure a positive outcome for all.

We proceeded by engaging in two phases; phase one saw us review the financial forecasts and engage with the company’s ten largest creditors to gauge the appetite for a Company Voluntary Agreement (CVA). We then enlisted the help of The Finance Exchange to support us in devising a refinancing plan and also took a collaborative approach with the company’s accountants to prepare accurate financial forecasts.

Phase two saw us prepare a CVA proposal and convene a meeting with the creditors of the business to see if they would accept. It was vital that we established a positive rapport and explained the CVA process in a clear and concise manner to ensure that there was a common understanding of the positon and implications of all stakeholders.

The creditors unanimously agreed and the CVA was approved in February 2017. By entering into a CVA the directors could carry on trading as normal as long as they addressed the problems that caused their debts in the first place.