Explore Learning CVA
Explore Learning CVA
Here at the Exam House we have managed to get our hands on the Explore learning CVA. Which is a form of the Insolvency act.
For a company that in 2019 reportedly made over 9 million profit in 2019. Swiftly follows a CVA in late 2020 smells of something fishy.
UPDATE:
Alan Kelsey as a director on 31 December 2020 has just left Explore. 2013 - 2020.
Feb 2021 - Current Directors of explore
Craig Light
Bill Mills
Jane Scott
Lisa Haycox
Toby Austin
Explore learning were at the forefront of tuition on the high street. However as the summary below has illustrated they have pivoted to a more online play. With pretty miserable effect.
EXPLORE LEARNING LIMITED and each of its CVA CREDITORS (as defined herein) COMPANY VOLUNTARY ARRANGEMENT (under Part I of the Insolvency Act 1986)
Company Number:
04117281
The full
The Summary Explore Learning Proposal
1. Background to the Proposal
1.1 ELL is the primary trading company of the Group and provides its members with tailored Maths and English tuition, aligned with the school curriculum. Pre-Covid, members attended sessions, typically twice a week, in one of ELL’s 144 centres across the UK.
1.2 The rapid and unprecedented development of the COVID-19 Pandemic has had a very significant impact upon the operation of ELL’s business. In complying with the COVID-19 Restrictions, ELL was required to temporarily close all 144 centres on 20 March 2020. The number of members and students attending the centres also declined rapidly in the weeks preceding the centre closures.
1.3 All centres remained closed during April 2020 and May 2020, causing significant disruption to ELL’s operations and financial performance. Six of the centres reopened on 18 June 2020 as a trial following the lifting of some of the COVID-19 Restrictions and the social distancing measures which were in place. However, with significant operating restrictions in place upon reopening, including social distancing measures limiting the number of employees, members and students who can be in a centre at any given time, keeping the centres open was not viable and ultimately, they closed once again and a decision was taken not to re-open the remainder of the centres during that time.
1.4 On 25 March 2020 ELL launched Explore at Home, a new online offering used to serve members. Whilst this service was well received, a significant proportion of the members chose to cancel or “freeze” their membership. This was often due to uncertainty of their own personal financial circumstances or because they felt that their children, particularly those in a younger age group, might not benefit from a purely online service to the same extent. In line with the easing of COVID-19 Restrictions, two thirds of ELL’s centres opened during the week commencing 20
July 2020.
1.5 The Directors concluded that, in line with many other businesses in sectors affected by the COVID-19 Pandemic, ELL had no option but to withhold payment of rent for March 2020 quarter’s rent and part of June 2020 quarter’s rent and/or enter into rent deferral or waiver agreements as part of a series of liquidity preservation measures, except in respect of those agreements detailed at Paragraph 6 of Part 1 of Schedule 1 (Key Bilateral Creditor Agreements) below.
1.6 Notwithstanding these measures, membership had fallen by nearly 40% by the end of April 2020. Further, COVID-19 is expected to have a continuing impact on ELL’s business, as social distancing continues and reflecting members’ growing preference for the delivery of ELL’s services either purely online, or with a combination of in centre and at home learning.
1.7 The Directors’ forecasts indicate that, given these and other factors, attendance at centres will remain materially depressed by comparison to the levels seen in prior years and many centres will become unprofitable unless rent reductions can be secured through the CVA and other centres will need to close as they have no prospect of returning to profitability. ELL has therefore prepared a strategic plan which is reliant on its network of centres being cut back by approximately one third. In anticipation of the implementation of the strategy, ELL undertook a redundancy process in June 2020 which resulted in the termination of employment of approximately 170 staff.
1.8 A full description and the background and recent history of the business is set out at paragraph 3 of Part 1 of Schedule 1 (Background to and reasons for the Proposal).
2. Objectives of the Explore Learning Proposal
2.1 The objective of the Proposal is to restore the financial viability of ELL so that it can continue trading on a solvent basis for the benefit of all its stakeholders. It seeks to achieve this by a combination of:
2.1.1 compromises to the terms of ELL’s Leases in Categories B to F, as more fully described below;
2.1.2 compromising rent arrears across all Leases which are outstanding and which ELL is unable to pay as a result of the COVID-19 Pandemic;
2.1.3 ceasing to trade from a number of sites which are loss-making or not considered viable in the long term;
2.1.4 ceasing to trade from the Administration Centre with the aim to move to a smaller and cheaper site reflecting the reduced level of operations;
2.1.5 compromising the business rates arrears as at the Effective Date and the business rates liabilities due for the 2020/2021 tax year;
2.1.6 compromising contingent liabilities, including those owed to guarantors, previous tenants, previous guarantors and sub-tenants; and
2.1.7 compromising inter company creditor agreements to support the post CVA
balance sheet of ELL.
2.2 The Proposal does not seek to compromise sums due to Ordinary Unsecured Creditors, which will therefore continue to be paid in full. However, Ordinary Unsecured Creditors:
2.2.1 are entitled to vote, with their CVA Claim being valued as the relevant
amount of unsecured debt they have as at the date of the Creditors’ Meeting; and
2.2.2 if the Proposal is approved, will be prevented from taking any action against ELL as a result of any CVA Related Event.
2.3 Given that a CVA is unable to affect the rights of creditors in respect of Preferential Liabilities or Secured Liabilities, the Proposal does not seek to compromise any such Liabilities.
3. The key terms of the CVA proposal for Landlords
3.1 The Directors have carried out an assessment of ELL’s lease portfolio of its centres and its Administration Centre and the Proposal divides ELL’s Leases into six
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categories, with each category of Leases being differently affected pursuant to the terms of the CVA. The categorisation of the Leases and the rationale for the differential treatment is further described in paragraph 6 (Lease Categorisation) of
Part II (Introduction).
3.2 The main effects of the Proposal on each of the six categories of Leases are summarised in the following table. The full details of the effect of the Proposal on each Lease are set out in Part VI (Terms of the Company Voluntary Arrangement). In the event of any inconsistency between the table below and Part VI (Terms of
the Company Voluntary Arrangement) then the latter shall prevail.