CVA case study: Bristol-based company in construction sectorThis company is an established and experienced maintenance, construction, renovation and repair company specialising in providing all the trades and services required for homeowners and landlords. Although it is based in Bristol, the company also serves the wider south west areas of South Gloucestershire, Somerset and Wiltshire.
They are the prime contractor for many letting agents throughout the region and hold contracts with many large businesses.
The company was encountering financial difficulties due to:
- accounting irregularities (e.g. wrong journal entries in Quikbooks)
- poor cost/employee control
The board identified the problems in September 2013 and thus commenced remedying the accountancy, introduced a costing integrated system and then migrated to self employed sub contractors to try and deal with the resultant cashflow pressures.
These turnaround actions largely helped the business to survive short-term, however there were legacy debts owing to creditors that the company just could not service.
The company appointed KSA after HMRC took walking possession of the assets against the total liability owed to the Crown, and auctioneers were due to uplift the following week.
KSA negotiated with HMRC and explained that a CVA was being proposed. HMRC complied with KSA and took no further action and agreed to suspend uplifting the goods which allowed the CVA to be finalised and for a meeting of creditors to be called. The body of creditors, including HMRC, supported the CVA proposal.