The Pension Protection Fund (PPF) has published new guidance on Company Voluntary Arrangements (CVA) with the aim of explaining the approach that employers and their advisors should take when presenting a CVA to the PPF. A CVA is a voluntary insolvency process through which a company can compromise some of its debts and obligations and is often used to, for example, extract a struggling company from onerous property lease obligations. This follows a number of recent high profile CVAs, such as House of Fraser and Toys R Us, which have hit the headlines due to the presence of significant defined benefit pension schemes with creditor rights, exercised either via the trustees or the PPF.
The new guidance does not change the specific restructuring principles that have long been established following the first PPF compromise arrangements (including Uniq plc in 2011) which are set out in the PPF’s August 2016 guidance “The PPF Approach to Employer Restructuring”. Instead the focus of the new guidance is on ensuring that the employer and its advisors have addressed a number of key issues which demonstrate that the restructuring plan will be successful and therefore should be supported by the PPF.
