Net Assets: what the new restructuring regime means for your business

Welcome to the sixth piece in our 'Building a resilient balance sheet for 2021' series looking at solutions and opportunities for 2021 viewed through the balance sheet. In this post, we look at the new restructuring regime introduced in June last year and how creditors can be forced to forego some of their debts whilst leaving directors and shareholders in control of their business.

Businesses need capital to invest and grow. The lost revenues and increased costs caused by Coronavirus will constrain growth for many. This will at best impact shareholder value and at worst threaten the ability to continue to trade.

Are CVA's an effective solution?

At the same time, the CVA is undergoing a renaissance in the retail and casual dining sectors. A CVA allows a business to continue trading under the same ownership and control whilst its debts are compromised. Used particularly to deal with onerous lease portfolios by reducing rents, a well thought through CVA can be an effective solution. 

These reforms are aimed at increasing the numbers of director and company led restructurings. In our view, they will be beneficial to the recovery of the wider economy. They will promote a more collective approach to restructuring which will benefit more stakeholders than at present.