BDO aims to mirror JJB success with Focus CVA
Firms partners hoping CVA will help DIY with crippling lease costs
BDO Stoy Hayward is preparing to deliver a key company voluntary arrangement
proposal to save Focus DIY, the UK’s third largest DIY chain from the threat of
administration.
Partners Shay Bannon, Sarah Megan Rayment and Malcolm Cohen are acting as CVA
nominees and will pitch the deal to creditors at a 2pm meeting on 24 September
in London.
It is hoped landlords will give the company some respite from the crippling
lease costs believed to be the cause of the troubles at Focus.
In the CVA document seen by Accountancy Age, BDO said the main reason Focus
DIY was ‘significantly cash negative’ was down to paying £12m a year in rent,
rates and service charges to landlords of 38 premises no longer being traded by
the group.
The landlords of closed premises will receive ‘closed premises rent’ due up
to 28 September 2009 if the CVA is endorsed. Closed premises landlords will also
be entitled to make a one-off claim against two CVA funds with a combined pot of
£3.7m, BDO added.
The firm will be hoping to match the success of KPMG, which brokered the
landmark CVA of JJB, the struggling sports retailer. In standard CVA cases 75%
of creditors must greenlight the deal for it to be pushed through.
CVAs ensure the company remains under the control of its management, causing
less disruption to the day-to-day operational running of the business, making it
a much more effective tool in achieving corporate rescues, the Insolvency
Service has previously said.
