A snapshot of company voluntary arrangements: Success, failure and proposals for reform

Walton, Peter; Umfreville, Christopher; Jacobs, Lezelle

doi:10.1002/iir.1381

Cited by 2 publications

(2 citation statements)

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“…In the UK, a popular but relatively often unsuccessful procedure is the so-called CVA (Company Voluntary Agreements). A study of 552 companies that initiated the above procedure in 2013 found that as many as 360 proceedings failed at an early stage (Walton et al 2020). Based on a survey of practitioners carried out by the same authors in 2017, it was found that:…”

Section: Literature Backgroundmentioning

confidence: 99%

Approval of an Arrangement in the Restructuring Proceedings and the Financial Condition of Companies Listed on the Stock Exchanges in Warsaw. Is There Any Relationship?

Prusak

Galiński

2021

JRFM

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This paper attempts to identify the financial indicators differentiating companies that are insolvent or at risk of insolvency and have successfully entered into an arrangement with their creditors from those that have not. In addition, a two-factor model for predicting the odds of an arrangement has been proposed. The research was conducted using a population of companies listed on stock exchanges in Warsaw that initiated restructuring proceedings between October 2004 and 31 December 2020. Binary logistic regression was used as the research method. The research shows that the financial health of public companies in Poland, as measured by various financial indicators, has little impact on the effectiveness of a debtor–creditor arrangement. The main measure showing discriminatory features between groups of successful and unsuccessful entities is the share of short-term liabilities in total liabilities. A statistically significant influence was also recorded for the indicator showing the share of short-term receivables in the total assets. Furthermore, a statistically significant discriminatory power for both groups was recorded for the indicator showing the ratio of inventories to sales revenue. However, in this situation the selection of this measure was due to the industry diversity of the research population. The identification of these determinants and the proposed model may help courts and supervisors to divide insolvent companies into those that should be subject to liquidation or restructuring procedures at an early stage of the proceedings. Consequently, this can significantly reduce the direct and indirect costs of implementing bankruptcy proceedings.

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Section: Literature Backgroundmentioning

confidence: 99%

Approval of an Arrangement in the Restructuring Proceedings and the Financial Condition of Companies Listed on the Stock Exchanges in Warsaw. Is There Any Relationship?

Prusak

Galiński

2021

JRFM

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“…Jostarndt, Sautner (2010). 17Camacho-Miñano et al (2015).18 Laitinen (2008Laitinen ( ), (2011;Lukason, Urbanik (2013).19 Walton et al (2020).20 Restructuring law of 15 May 2015, consolidated text: Journal of Laws of the Republic of Poland [JL] 2015, item 978.…”

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confidence: 99%

Factors affecting the conclusion of an arrangement in restructuring proceedings: evidence from Poland

Prusak,

Zaremba,

Galiński

2023

10.14746/rpeis

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The EU Restructuring Directive (2019/1023) requires Member States to provide a preventive restructuring framework for financially distressed entities that remain viable or are likely to readily restore economic viability. The first step to a successful restructuring is the approval of an arrangement between the debtor and creditors. The main research objective of the article is to identify factors affecting the conclusion of an arrangement in restructuring proceedings. In the process of filtering companies initiating a restructuring procedure, these factors are seen as increasing the probability of concluding an arrangement between debtor and creditors. Moreover, an additional research objective is to construct a turnaround prediction model aimed at assessing the probability of a conclusion of an arrangement in restructuring proceedings. The study covered the companies in Poland for which restructuring proceedings opened between 2016 and 2021 ended with the approval of an arrangement, and a similar number of companies that failed to restructure successfully. Binary logistic regression was applied to achieve the aims of this study. The results show that two financial variables affected companies in terms of their chances to conclude the arrangement: the current ratio and return on assets were among the statistically significant indicators and they are characterized by higher values for debtors reaching the arrangement with their creditors. A direct positive relationship was also identified between the company’s lifespan and the outcome of the proceedings. The probability of the conclusion of the arrangement was also affected by the type of industry. Models assessing the probability of completing restructuring proceedings with an arrangement can be useful for insolvency practitioners and financial analysts during viability assessments.

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A snapshot of company voluntary arrangements: Success, failure and proposals for reform

Cited by 2 publications

References 0 publications

Approval of an Arrangement in the Restructuring Proceedings and the Financial Condition of Companies Listed on the Stock Exchanges in Warsaw. Is There Any Relationship?

Approval of an Arrangement in the Restructuring Proceedings and the Financial Condition of Companies Listed on the Stock Exchanges in Warsaw. Is There Any Relationship?

Factors affecting the conclusion of an arrangement in restructuring proceedings: evidence from Poland

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