CVAs stop market from working properly I AM writing in
Page 12
If you've noticed an error in this article please click here to report it so we can fix it.
support of the Road Haulage Association (RHA) taking action against company voluntary arrangements (CVAs) and prepacks, and the coverage of Elite Transport since then. As the owner of a large logistics firm and RHA member, I find it incredible that failed operators are allowed to reappear through pre-pack administration and CVAs.
The arguments in support of these practices do not stand up to any form of scrutiny. The principal claims, to protect employees and customers, don't hold any water. In a properly functioning marketplace, customers would find alternative suppliers, and employees would migrate with the work. It's denying other firms the opportunity to gain additional business. The government should note that profitable firms pay tax, unprofitable ones don't. These arrangements offer no encouragement for successful operators to invest in our industry.
Having succeeded with their CVA at 37p in the pound, Elite is now gaining an undeserved competitive advantage. While I appreciate creditors' desire to recover any money rather than post a debt, the situation is more complex for some to recover 37p in the pound, these same creditors may be forced to support the business and maybe lose even more money if this CVA is unsuccessful.
Pre-packs and CVAs are invariably shortlived and unsecured creditors are left out of pocket in the end. The acid test for approval needs to be more rigorous, and only firms with real chances of success should qualify.
John Williams Group MD, Maritime Transport