Midlands Based Shop fitting CompanyThis company was incorporated in late January 2008. The director contacted KSA after reading the website. A meeting was subsequently held between the director and KSA regional manager, George Davis, in May 2013. KSA were appointed to assist the shop fitter company in June 2013.
Turnover for the financial year ending 31st January 2013 was of £229k with a loss of c£38K. In the first year of the CVA, a slight rise was forecast to £251K with a net profit of c£14K.
The company was encountering financial difficulties due to:
- A decline in orders from predominant customer
- Large HMRC debt and recovery action commenced
- The company operates from leased premises, there was arrears of c£6K
- 3 year lease at the time, there was one quarter of a year left on the lease
- The CVA would mean that 3 jobs would be saved with no redundancies.
Bank & Financial facilities
- The company had no loans
- overdraft facility of £4K
- The bank held no security
- Personal guarantees had been provided
- Director loans of c£4K had been made available to the company and therefore a connected creditor.
- The directors had been involved with 2 previous insolvencies.
Unsecured Creditor debt:
- £92K of which HMRC was c94%
The nominees review took place in November 2013. The director had been made aware of potential contravention of s216 of the Insolvency act 1986: using a similar name to previous liquidated company.
The CVA was filed at court in December 2013 and subsequently distributed to all creditors.
- Initial rejection received from HMRC.
- The creditors meeting was held in January 2012 and adjourned for two weeks to permit further information to be supplied to HMRC.
HMRC Voluntary Arrangement Service then approved the CVA with strict conditions which included:
- Maximum salary for director
- additional funds to be deposited with supervisor.
Unfortunately, the director could not raise the additional funds therefore the CVA was rejected.