SOFA maker Collins and Hayes is asking unsecured creditors to back a CVA (company voluntary arrangement) which will see them receive 20 pence in the pound over five years.

That means unsecured creditors could get around £1 million back over the five-year period, should they back the CVA, as The Furnishing Report revealed Friday (see related).

The alternative for Collins and Hayes—which is forecasting sales of under £5 million this year—is bankruptcy.

To pass, CVAs require 75 percent of affected creditors—by value, not number—to approve the proposals. Most of Collins and Hayes' unsecured creditors are owed four and five-figure sums, according to correspondence sent out by KSA.

KSA is the proposed supervisor, and has been previously been engaged to assist in the preparation of CVAs for two companies where Ayiaz Ahmed, owner of Collins and Hayes through his Wessex Bristol Investment vehicle, had been a director.

The largest amount of money owed by Collins and Hayes is to an entity called Houlong Group Holdings, based in Dubai. It is owed exactly £3 million.

It is not known what services or goods that Houlong Group Holdings has provided, or contracted to provide, to Collins and Hayes. But, it does mean that Houlong could be either be a deal-maker, or deal-breaker, for the CVA.

Securing its vote will greatly enhance the chances of the CVA being approved, though Houlong will have to forego £2.4 million of the amount it is owed and settle instead for £600,000.

The Furnishing Report tried to reach Houlong to ask if it will back the CVA, but we could not find any telephone number, website or reference to it.

Its address, in information sent to affected creditors, is an office in Dubai. An online search for that address matches only to companies unrelated to HGH, including separate, named businesses specialised in telecoms, marketing, offshore company formation and international tax planning.

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Sofa maker Collins and Hayes asks creditors to back CVA