Compromise Agreements

Cork Gully provides compromise agreements for corporates and insurance companies:

• Schemes of arrangement
• Company Voluntary Arrangement

Schemes of arrangement

Schemes of arrangement are a well-established method to help with the restructuring of a company. Mostly these schemes are applied to insurance/reinsurance companies as a way of exiting the business early and releasing surplus capital.

Working closely with senior management, Cork Gully would draw up a detailed Scheme document, setting out a timetable and would liaise with all parties to make sure that the Scheme is implemented and the business is properly concluded. In effect it enables insurance companies to avoid some common problems such as reducing run-off costs, evaluating and dealing with creditors’ claims and making an earlier return of equity to members and shareholders.

There are three key elements to a successful Scheme:

• Preparing a Scheme document that meets the needs of the stakeholders (including, members, creditors, FSA etc)
• Ensuring the project team is equipped and resourced to carry out the plan in the allotted time frame and that all parties and stakeholders are properly briefed
• Agreeing and adhering to a realistic timetable

Company voluntary arrangement

Company Voluntary Arrangements (CVAs) are a fairly common device and can be used by an insolvent company to help reduce and reschedule payments to its creditors. A CVA must be approved by creditors before it can be implemented and provides a way for a struggling business to improve its cash flow and work through its difficulties.

A CVA takes place between the company and its creditors and can be tailored to suit specific circumstances. Typically CVAs can last for three to five years. Potentially CVAs can prevent a business from going into administration however there may be other options to explore before considering this route.

Our team has significant experience in assisting directors in the preparation of proposals for CVAs and in acting as supervisors in approved arrangements.