Company Voluntary Arrangement (CVA)

Buying Back the Assets – Not Always the Simplest Solution!

Buying Back the Assets – Not Always the Simplest Solution!

In February I was introduced to a company which manufactured sandwiches and distributed them via a van sales operation to retail outlets on a sale or return basis. The company was losing money, had breached its overdraft limit and was running out of cash. The company had assets worth £20,000 on liquidation and liabilities of £180,000 (£92,000 owed to the bank). On the face of it liquidating and buying back the assets would seem the obvious solution. However, doing so would have serious consequences for the directors who had given personal guarantees to the bank. The directors, who were in their mid to late 50’s, had no funds to either settle their guarantees or buy back the assets and so faced losing their house and well as their income were the company to fail. Having discussed the option... »