Explore Learning CVA Process

Explore Learning Update

The Covid-19 crisis has challenged many businesses, and after careful consideration we have had to make the difficult decision not to reopen 41 of our learning centres. All of the members of the affected centres were informed at the beginning of June and a large proportion of these members have continued their membership with our Explore at Home team.

In relation to those closed centres, we have instructed FRP Advisory Trading Limited in respect of a proposed Company Voluntary Arrangement between Explore Learning and its creditors. The CVA will enable us to compromise the lease liabilities of the closure centres and rebase the rents on a number of other sites. The CVA is a property-only CVA however all of the Company’s other creditors, including members have to be notified of the CVA by law. The CVA process will have no impact on the provision of your child’s ongoing membership and sessions.

What is a Company Voluntary Arrangement?

A Company Voluntary Arrangement (“CVA”) is a common tool used to deal with the issues caused by unprofitable leases and well-known names that have used CVAs in the past include New Look and Mothercare, while the likes of All Saints, Travelodge, and Wagamama-owner The Restaurant Group have all used CVAs so far this year.

A CVA is a formal procedure which enables a company to agree with its creditors a composition of arrangement.  It requires the approval of 75% or more in value of a company’s creditors voting on the proposal for a CVA. If a CVA is validly approved, it binds all creditors of the company to the new agreement.

What is the CVA trying to achieve?

The CVA will enable the Company to compromise the lease liabilities of the sites closed and rebase the rents on a number of other sites to market level thereby significantly reducing costs.

The CVA is a property-only CVA and therefore all of the Company’s other creditors, including employees have to be notified of the CVA by law but there is no compromise in relation to any other amount owing.

In addition to the lease liabilities being compromised, shareholder and the Company’s secured creditors are supporting the CVA with the injection of further funds and waiver of existing debt which will strengthen the balance sheet and put the Company in a far stronger position.

Frequently Asked Questions (FAQs)

  • Will my child’s membership continue as normal?

Yes, the CVA will have no effect on any member receiving their normal monthly membership.

  • If this has no effect, why are you advising us?

Under the Insolvency Legislation, all creditors must be notified of the CVA and given the chance to vote on the proposals being put forward.  As a member, you are considered creditors as at any one point in time, you may be owed services based on your ongoing monthly membership fee.

  • Do I have a vote in the process?

You can vote if you wish, but no action is required from you unless so desired. If you wish to have more details on the voting process please log onto the following web page, using the credentials below.

http://creditors.frpadvisory.com

Code: E1060LON

  • What happens if the CVA does not obtain the required support from creditors?

We have been talking to all of our key suppliers, HMRC and landlords regarding the proposed CVA and we are confident we will garner enough support for the CVA to be approved prior to it being launched.

In the unlikely event the CVA proposal is not approved then in order for the restructuring still to take place it will be necessary to run an accelerated sale process for the company.

What Next

The CVA meeting will occur on 3rd September at 11am and there is then a 28 day period before it is effective. Once this is passed, the landlords of the closed sites will receive a payment to exit the lease and we will contractually change the terms of a number of other leases to reduce costs.

For any further questions please e-mail: [email protected]