As the news breaks that the number of operators entering into a company voluntary arrangement (CVA) has increased in recent years, and that the RHA will be stripping membership from those who enter such an arrangement, The Hub has discovered that Elite Transport Services has filed a proposal for a CVA last month to defer paying its debts.
The container haulier hit the headlines in January, claiming it was hit by an 8% drop in port container work, leading to the closure of its Southampton depot. It also made 50 staff at its Felixstowe site redundant along with some head office staff in Manchester.
The news of the proposal came just as the RHA revealed that it would be taking a tough stance on companies who have entered into CVAs, pre-pack deals and receiverships, immediately terminating a firm's membership as soon as it enters into an agreement with creditors. It is cracking down on firms that ignore the RHA’s Articles of Association, especially as RHA members are often among the unsecured creditors effected.
RHA chief executive Geoff Dunning said: “We will be writing to the senior traffic commissioner urging her to take a much more robust stance on those companies that fail to notify the traffic commissioner promptly of the change of circumstance.”
“Survival is difficult enough in the current economic climate, without having to compete with firms that write off very significant debt”.
According to The Insolvency Service, 26 firms in the land transport industry entered into a CVA in 2012, up from 21 in 2011. Although the number of administrations are still far above this level (2012: 49), the CVA option seems to be proving more popular for operators as they look to continue trading through tough times.
Whether creditors will vote for or against Elite Transport Services’ CVA is yet to be seen. Creditors are still awaiting the date of the meeting where they will consider the company’s offer, despite the proposal being filed to Manchester County Court on 23 January.