One of the director’s of the company contacted Robert Moore of KSA to discuss the company’s present financial situation. Then, after subsequent telephone conversations with KSA regional manager, George Davis, a meeting was requested and held between the directors and KSA. The company operates within printing sector.
KSA were appointed to assist the company with a Company Voluntary Arrangement (CVA) in September 2015. Turnover for the 2014 trading year, was c£990K.
The company was encountering financial difficulties due to:
- Poor financial management over a significant period of time.
- Investment in equipment and assets based on a flawed view of the cash position.
- Significant business growth over the last two years, making the current factoring facility insufficient for the company’s needs. Directors examining alternatives.
- The company is unable to pay its debts as and when they fall due
- HMRC and trade creditors have threatened to wind the company up
Premises
- The company occupies a leased industrial unit.
Employees
- The company employs 25 staff including the directors
Bank & Financial facilities
- The company had an Invoice finance facility which was secured with an all assets debenture.
- As detailed previously the directors were examining alternative facilities.
- As a secured creditor, the invoice finance provider’s debt is not usually compromised within the CVA; and with the provider’s approval will operate as normal during the life of the CVA
- The bank was unsecured with an overdraft of £25K
- The Bank provided no other facilities
Director:
- One of the directors had provided Personal Guarantees (PGs) to the bank.
- A CVA may be a qualifying event for a creditor to seek to rely on the PG’s that have been provided.
- Connected creditor balances amount to c£78K; c£58K of which were Directors’ Loan accounts
- It is usually the case that connected creditors do not receive a dividend within a CVA. They are usually expected to waive their claim to those monies and the debt does not survive the CVA
Unsecured Creditor debt:
- £400K of which HMRC was c14%
Cost & overhead reduction
- prior to KSA’s appointment the payroll was reduced by several positions and a second site of operation was closed.
- The directors continued with negotiating and alternative Invoice finance facility, which was obtained on more favourable terms than that of the existing one and so the company changed over to a new facility. At the same time the directors also decided not to pursue the CVA and KSA’s appointment was terminated.
