Sports retailer calls KPMG in for the second time to help stave off administration
KPMG HAS PROPOSED a second Company Voluntary Arrangement (CVA) for sports retailer JJB Sports in as many years.
Head of restructuring at KPMG, Richard Fleming, has proposed the CVA to prevent the company entering administration.
JJB entered into a CVA in April 2009, having gained the backing of 99.9% of creditors. KPMG partner Richard Fleming spearheaded the agreement, which saw 140 stores closed and changed rental payments to monthly from quarterly on the remaining 250.
CVAs usually repay a portion of debt owed to creditors – including landlords – over a period of time, while allowing the business to continue trading. A CVA must be voted for by 75% or more, by value, of creditors to be pushed through.
The CVA proposals could see creditors likely to receive 24.6p for every pound they are owed compared to 1.1p if the business entered administration.
Fleming, proposed supervisor of the CVA, said: “The CVA proposed by JJB today gives the company a chance to avoid administration and carry out a fundamental restructuring of its property portfolio.
Landlords will see their monthly rental payments by about 55%. However, property owners will be able to take back stores if it is in their “financial interests” to do so.
“While CVAs have come in for criticism, we believe they offer a more socially responsible alternative for companies in distress. They must always offer a better return to creditors than administration but, beyond this, they keep more of a business’ operations intact and more of the workforce in jobs, said Fleming.
The creditors will vote on the CVA on 22nd March 2011.
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