Innovative CVA proposal to allow creditors to cash out their claims announced by MFGlobal Administrators.
A number of material settlements and realisations over the last six years have meant that the MFGUK house estate is now considerably simplified since the company went into Administration. This has allowed the payment to ordinary unsecured creditors of 90p in the pound to date. However, the payment profile of future dividends is uncertain because of unresolved issues, principally relating to funds receivable from a bank but subject to retention and German tax reclaims.
The complexity of these tax issues leads the administrators to believe that they are unlikely to be resolved for some years.
In the meantime the costs of running the estate are substantial as a result of the need to maintain records regarding all of the Company's extensive trading including the need to maintain a database of some 3500 creditors.
As a result of these factors the administrators will be proposing shortly a CVA which will give creditors a cash alternative as opposed to having to wait, potentially for many years, for the final resolution of the Company's affairs. As well as providing an option for creditors it will be likely to save substantial costs in the estate as certain expensive databases are dispensed with.
The CVA will include options for creditors to take cash to bring their total return to 99.75p in the pound, or to continue to participate either in the medium term or the long-term future of the estate. The cash alternative has been arrived at following an auction process between a number of counterparties. The draft CVA will contain full details of the options open to you, the timetable and what you will need to do. We look forward to engaging with you further as we move forward to implement the CVA strategy.
© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.