Harris Lipman News

CVA Helps Limit Losses for Creditors

18/01/2010

Jean Muir Limited was once one of the UK’s most iconic fashion houses, with an international reputation, but when it hit hard times in early 2007, with Barry Lewis and Martin Atkins of Harris Lipman appointed as joint supervisors, the decision to wind down the company slowly, using a Company Voluntary Agreement (CVA) meant creditors were able to recover most of what they were owed.

The company was established by the eponymous designer in 1966 and achieved particular fame for its ‘jersey dresses’. Following Ms Muir’s death in 1995, the company was continued by her husband, Harry Leuckert, who opened the brand’s first stand-alone shop in 2004, but when difficulties in attracting new investment occurred, this led to the directors taking the difficult decision to seek professional help to achieve the best outcome for creditors.

By continuing to trade in the short-term, the store was able to sell its final range, the Spring/Summer 2007 collection, through its own store to fashion buyers eager to take advantage of the last chance to own a Jean Muir garment.

All of the firm’s directors, and many of its staff, stayed on board during the wind-down period, ensuring that Harris Lipman could call on their specialist knowledge when needed, while also providing valuable information in realising outstanding debtors.

As a result, the company’s preferential creditors received all of the money they were owed, while its unsecured creditors received 83.8p in £, which was greater than the forecast return of 75p in £ when the Arrangement was proposed.

Partner Martin Atkins said: “The benefit of a CVA is that an orderly winding down of a company’s affairs will often result in the maximum realisation for creditors.

“Had we just closed the shop on day one, and disposed of the assets without the assistance of the staff and directors, we would have had a typical fire sale and creditors would have been left, subject to costs, with a payment in the region of 37p in £.

“By keeping it open, we were able to maximise returns – not only were we able to dispose of stock at the most advantageous price, but we also collected the majority of debts, which is much easier to do if the directors are still around, and negotiate the successful surrender of various leases, which reduced the potential liabilities.

“We made a judgement call at the start, that a CVA would provide the best outcome for all concerned, and that has been borne out by the results.”

For more information please call 020 8446 9000.

 

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