PE BROADCAST: RP vs CVA – navigating distress and creating shareholder value

We're still seeing record levels of deal activity but with growing stress across the supply chain. With Government support measures disappearing and inflationary pressures beginning to bite, many funds will be looking at their portfolios and considering some of their more distressed assets.

Legislative changes have reshaped the restructuring toolkit. The Government’s intention was for these reforms to improve the restructuring regime in the UK and help to further facilitate business turnarounds. But, do they offer new ways to gain competitive advantage and enhance shareholder value?

So far a combination of fiscal intervention, legislative change and ready access to equity and debt markets, wholesale distress has largely been avoided. However, rental arrears alone are £7billion and over £74 billion has been raised in debt by UK businesses. Many of these businesses will struggle to repay these liabilities in the near to medium term. So, while the restructuring market is quiet right now, we are very much in a ‘when’ not ‘if’ situation in terms of distress creeping into the economy.

We anticipate a swathe of both Company Voluntary Arrangements and Restructuring Plans, but picking the right option and using it correctly is critical.

In our latest PE Broadcast we discuss picking the right tool for the job, how to deploy CVAs and RPs successfully and, most critically, how to look beyond managing distress and creating shareholder value through the transformative potential these tools can deliver.

Implementation and contingency planning are critical as is significant stakeholder management. But, the real impact of these tools comes from the creation of realistic turnaround plan for the business.