Creditors of the company agreed to accept the voluntary arrangement at a meeting on 20 December by a majority of 81%, according to papers posted at Companies House.
Under a CVA, a limited company agrees to pay creditors over a fixed period while continuing to trade.
The business announced at the beginning of December that it was starting a consultation on closing 11 of its 45 shops in and around the Wigan area. It said the restructure would enable it to make the changes required to bring the company back to profitability.
Waterfields’ latest annual report, filed on Monday (23 January), showed the company recorded a profit in its most recent financial year and had secured additional wholesale business to complement its retail operations where sales were marginally down.
Turnover for the year to 5 April 2016 was £14.87m (down from £14.94m the previous year), with pre-tax profit of £134,483 for the year, down from £356,427 the year before.
However, since the end of the financial year, the outlook had worsened. Waterfields said it had recently experienced difficult trading conditions due to increased costs in all areas, which could not be passed on to customers, as well as disappointing sales throughout the summer months.
These factors combined with a high level of depreciation charges associated with significant historic capital expenditure, the report said.
A CVA was seen as the best solution to protect creditors and restore a profitable trading position.
Waterfields, which employed 618 staff in 2016, was founded in 1926, and is in the hands of the fourth generation of the family, with the fifth generation also working in the business.
WHAT IS A CVA?
A limited company can use a Company Voluntary Arrangement (CVA) to pay creditors over a fixed period and continue trading.
An insolvency practitioner works out an ‘arrangement’ covering the amount of debt to be paid and a payment schedule within a month of being appointed.