FAMILY-RUN BUSINESS Silentnight has called in KPMG insolvency professionals to propose a company voluntary arrangement (CVA).
The firm hopes that the CVA will help Silentnight avoid administration and repay creditors 65p for every pound owed. The business ran into trouble after lenders pulled back credit facilities and left the business facing a £100m pension hole, The Guardian reports.
Brian Green, restructuring partner at KPMG, said a CVA would offer “a much better return than in the alternative of administration”.
He continued: “The CVA proposed by Silentnight gives the company a chance to avoid administration and safeguard the jobs of around 1,250 people.”
CVAs usually repay a portion of debt owed to creditors 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 for approval.
Silentnight chief executive Neal Mernock said the company was currently able to generate a profit but added that the withdrawal of lending facilities left the business with an “unserviceable level of historic debt”.
The £100m pension deficit is a result of a series of acquisitions during the 1980s and 1990s. One feature of the CVA is to transfer the pension to the Pension Protection Fund.
The creditors will vote on the CVA on 6 May.
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