A leading toolmaking company had traded successfully for many years, but had, as is common for longstanding manufacturing businesses, set up a defined benefit pension scheme for its staff many years ago. Over time the business had become much smaller, relative to the size of the liabilities of the pension scheme.
During the late 2000s it agreed a regulated apportionment arrangement (RAA) with the Pension Protection Fund (PPF) and the Pensions Regulator, to transfer responsibility for the pension scheme to the PPF and allow the company to continue. Having reached that agreement trading improved, and the company opted not to go ahead with the RAA.
However, some years later trading levels were again struggling to generate the profits to support the company and the pension scheme, and the directors approached FRP to help resolve the problem.
We were retained to undertake two key tasks:
- to find a buyer for the business and assets that preserved employment and minimised the level of claims from other unsecured creditors
- to agree terms of a company voluntary arrangement (CVA) with those creditors who would remain unsettled as part of the sale.
Our team ran an accelerated sales process and quickly narrowed the number of interested parties to those with a serious intent and funding to conclude a deal.
We were able to facilitate a sale (outside insolvency) to a complementary business that had clear plans to bring the two businesses together, preserving all the jobs, and offered the best overall deal to acquire the business.
Once the terms of the sale were fixed we closed our continuing negotiations with the other creditors, primarily the PPF but also HMRC. The CVA was approved shortly after the sale concluded, and was successfully completed several months later, once all claims had been agreed and a first and final dividend paid to creditors.
FRP facilitatated a sale outside insolvency to a complementary business that had plans to bring the two businesses togetherGareth Morris Restructuring Advisory