Partnership Voluntary Arrangement (PVA) - Case Study

 
An established and reputable Italian Restaurant was given a new lease of life following the approval of a Partnership Voluntary Arrangement 'PVA'.

This authentic Italian restaurant has been trading for over 25 years in a small Cheshire village. It was the first restaurant of its kind in the area and provided locals with the opportunity of sampling genuine home made Italian cooking.

The business traded profitably and successfully for many years. However, in recent years other restaurants moved into the area which increased competition. Also, late in the 90's valuable supplier contracts were lost, as the trend towards lower cost, lower quality products took hold.

The drop in turnover due to the situation had a negative effect on the cashflow situation of the business. Payments to Revenue and Customs became late resulting in interest and penalty charges being levied.

The company contacted Budsworth & Co for help, and after intense planning and discussion, it was decided that a PVA was the way forward for the partnership.

The basic effects of the PVA were that over a 12 month period, the top floor of the large restaurant premises was to be converted into three apartments which would be sold and the net sale proceeds offered to the creditors in full and final settlement of their debts.

A profitability strategy was also drawn up to ensure that the business could trade profitably going forward.

Once the PVA was in place, work began immediately on the apartment conversion. All three properties were sold 'off plan', thereby securing the necessary funds for the PVA.

The PVA has provided the business with legal protection from creditor action and now creditors look certain to receive 100% of the monies they are owed.

 

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