Case Study: Exit from administration via a Company Voluntary Arrangement (CVA) to facilitate a company restructure


Armstrong Watson was approached by the directors of a company specialising in the packaging and selling of luxury food products from the UK to mainland Europe, with its trading company based in the region.

Initially, the parent company provided working capital to the trading company to support its losses, as the company grew. However, it became apparent that there was a divergence between the parent company and the trading company directors as to how trading should develop. When the parent company was unable to implement its restructuring plans it withdrew its support.

In a short amount of time, the trading company was unable to meet its day-to-day expenses and the company was placed in administration. It ceased trading, the assets were sold, and book debts were collected. The amounts realised were insufficient to pay a distribution to any class of creditors.

How we helped

During the period of the administration, our Restructuring and Insolvency Partners Mike Kienlen and Daryl Warwick, who were the appointed administrators, continued a dialogue with the parent company who remained keen to be able to resurrect the trading company at some stage in the future. After detailed discussions, they advised that this could be done with a Company Voluntary Arrangement (CVA) proposed as the exit vehicle from the administration.

The terms of the CVA were that the parent company exclude its substantial claim and make contributions over a 12-month period, sufficient to pay the preferential creditors in full and hopefully make a small distribution to unsecured creditors. This was proposed on the understanding that the shareholdings of the two minor shareholders were restructured, and the existing directors were replaced in advance of the approval of the CVA.


This was a challenging assignment for the administrators. They had to come up with an exit solution that met the aspirations of the parent company to restructure but at an affordable cost. They also had to engage with the creditors, particularly HMRC to sell the benefits of this proposal. It is hoped that all creditors will benefit if the CVA is concluded successfully.

It’s unusual to go from administration to a CVA. In this case, the parent company was keen to restructure the trading company and the CVA provided an opportunity for the trading company to avoid being dissolved, allowing the possibility of trading again in the future. It also provided a better outcome for the creditors involved.