The Fitness First creditors have today voted through the company voluntary arrangement (CVA) proposal, which restructures the leases of the company’s property portfolio.
Richard Fleming, UK Head of Restructuring at KPMG and ‘supervisor’ of the CVA, commented:
“Today’s vote in favour of the CVA proposal not only addresses Fitness First’s operational issues around its property portfolio but also enables the wider financial restructuring and injection of fresh capital to take place, which were dependent on the CVA’s approval. We needed over 75% all creditors to approve but, as with all CVAs, we also needed over 50% of unconnected creditors to approve. We are pleased that the majority of landlords, who were the largest unconnected group of unsecured creditors, voted in favour of the CVA.
“A company can only propose a CVA when the alternative is administration and it must offer a better return to creditors. The Fitness First CVA is estimated to generate a return of 25-35p in the £1 for the landlords, versus less than 1p in the £1 in an administration. In this way, both the creditors and the company are able to fix an underlying business issue without going through a full trading administration; good news for Fitness First’s creditors and good news for customers and employees.
Brian Green, restructuring partner at KPMG and ‘supervisor’ of the CVA, added:
“As we have sought to develop company voluntary arrangement models, we have worked with creditors to find workable compromise agreements. In the case of Fitness First, our conversations with landlords – the relevant constituent group of creditors asked to accept a change to lease agreements – were particularly supportive of the continued payment of rates and the availability of a “clawback” mechanism to ensure they share in the business’ fortunes going forward. With the support of its key creditors, Fitness First has been able to find a way to avoid administration.”
Notes to editors:
For further information on the CVA, please contact
Sorrelle Cooper, Senior PR Manager: 020 7694 8527 / 07932 078218
Zoe Sheppard, PR Manager: 0117 905 4337 / 07770 737994
KPMG Press Office: 020 7694 8773
For further information on Fitness First, please contact
Tom Buchanan / George Hudson / Tom Eckersley, Maitland: 020 7379 5151
About company voluntary arrangements (CVAs)
Where a company is experiencing difficulties in paying its debts, the directors can propose a company voluntary arrangement (CVA) whereby the company enters into a legally binding agreement with its creditors, such as their suppliers or landlords. In a similar vein to an individual voluntary arrangement (IVA), which gives an individual an alternative to bankruptcy, a CVA enables a company and its creditors to come to a compromise agreement and avoid an administration or liquidation. A CVA can provide a company with some breathing space to allow it to reorganise or restructure its funding and/or its operations with as little disruption to the day to day trading as possible, with the control of the company usually staying within the existing management.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.