More Than Half of Groups Turning to CVAs Still Go Under

Bankruptcy proceedings designed to save struggling companies have resulted in failure in more than half the cases where they have been used, according to research by estate agency Colliers International, the Financial Times reported. Between 2016 and 2019, 13 of 23 company voluntary arrangements, which are used by UK businesses to reduce their debts, saw the group going into administration, while other companies that did not agree a CVA ended up seeking investors to buy the business. Failed CVAs include those agreed by Toys R US and Jamie’s Italian. “[CVAs] are a sticking plaster on a life-threatening ailment,” said Richard Hyman, a retail industry adviser. “They look to shave costs in a business and in this trading market the real issue that distressed businesses face is that they don’t generate enough revenue.” Read more