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Case Studies

LICENSED BROADCASTER / COMMUNITY RADIO STATION

customer background

This community radio station was broadcast in a borough of Greater Manchester, and operated under a Private Company (Limited by Guarantee).  The company had encountered various difficulties and was failing to trade profitably.  As a result it had accrued liabilities which could not be paid as they fell due, although it was supported by its Landlord who was dedicated to helping the station survive.   

 

Due to the nature of the business and its activities, there were complex considerations surrounding its ability to continue broadcasting, specifically the continuation of its OFCOM license.  

 

Solution 

The Business Debt Advisor was instructed to provide advice in relation to the overall position.  It was quickly determined that the license was not transferrable to a different entity, as any interested party would need to submit business plans and deliver on key commitments from the commencement of trading.  This meant that a number of the options available were not favourable and it was recommended that the company should enter into a CVA on the basis that this would not give rise to the withdrawal of the license, so long as the company could demonstrate that it was taking a sensible approach to dealing with its financial commitments. 

It was resolved that the company would propose a full and final CVA, which would be based on a lump sum contribution being made available by a third party.  The process could then be completed within a 6 month period, allowing a distribution to be made to unsecured creditors’ in satisfaction of the company’s obligations.   

approved CVA solution

The company’s proposal was duly submitted and approved. A lump sum of circa £40k was remitted to the Supervisor in line with the approved terms, and this strategy meant that the CVA was concluded within 6 months, and yielded a higher return to creditors’ than if the terms had provided for monthly contributions.

There were no other assets to be realised, and the Supervisor made a first and final distribution to the unsecured creditors’ of approximately 20 pence in every £. The company has returned to profitability and its business was preserved.

Careful consideration must be given to all options available to a financially distressed business. For more advice, fill out our Contact Form and we will be in touch. Alternatively, call our FREE ADVICE LINE on 0800 781 0990.