Carluccio’s company voluntary arrangement (CVA) proposal, Will Wright, restructuring partner at KPMG and a proposed supervisor of the CVA, comments
Commenting on the Carluccio’s company voluntary arrangement (CVA) proposal, Will Wright, restructuring partner at KPMG and a proposed supervisor of the CVA, said:
“Carluccio’s is a well-established and much-loved part of the UK high street. But like many other businesses in the casual dining sector, in recent times the company has been adversely impacted by a combination of well-documented pressures including a gradual decline in consumer spending and increasing competition, coupled with the rising costs of labour, raw materials, rent and business rates.
“Today’s announcement follows a strategic review of the business undertaken by the company’s directors. Specifically, this CVA is designed to tackle the cost of the company’s leasehold obligations across its restaurant portfolio, which if successful, will allow the business to move forward across a core, more profitable estate. Crucially, it forms one element of a wider turnaround plan which, pursuant to the CVA’s approval, will see an injection of funding into the business from the company’s majority shareholder, to fund an extensive and far-reaching investment and growth plan.”
Carluccio’s operates 103 restaurants across the UK. The CVA proposal divides the company’s sites into two categories: for a total of 69 Category 1 sites, the sites will be retained at current rents. For the remaining 34 Category 2 sites, a reduced rent, equivalent to 67%, will be paid for six months, while the company engages with landlords to agree the basis of any continued trading from these premises.
The proposed supervisors of the CVA are Will Wright and Rob Croxen from KPMG’s Restructuring practice.
Carluccio’s needs to secure at least 75% creditor approval for the CVA for it to proceed. A detailed proposal document is expected to be made available to creditors via a dedicated website today. The creditors will vote on the CVA on 31st May 2018. KPMG will spend the coming weeks in talks with creditors to ensure they understand the full detail of the proposal.
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About company voluntary arrangements (CVAs)
Where a company is experiencing difficulties in paying its debts, the directors can propose a company voluntary arrangement (CVA) whereby the company enters into a legally binding agreement with its creditors, such as their suppliers or landlords. In a similar vein to an individual voluntary arrangement (IVA), which gives an individual an alternative to bankruptcy, a CVA enables a company and its creditors to come to a compromise agreement and avoid an administration or liquidation. A CVA can provide a company with some breathing space to allow it to reorganise or restructure its funding and/or its operations with as little disruption to the day to day trading as possible, with the control of the company staying within the existing management.
About KPMG in the UK
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff. The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.