Recruitment Companies: another downturn after the "recovery"

3 December 2009

We cannot claim this is an empirical data based observation, BUT we are seeing more enquiry flow from recruitment companies in recent weeks. We are in dialogue with 6 recruitment companies right now about restructuring their businesses and in particular their HMRC liabilities. All have reported that sales have not recovered as expected when they set out to do deals with HMRC earlier this year. Last week we completed a rescue of a £4m recruitment company in Scotland. This was a company voluntary arrangement (CVA) and was approved by HMRC with some tough negotiations and modifications. What would the benefits be for a recruitment company going into a CVA? •Company voluntary arrangements (CVA's) can improve cashflow, quickly. •Stop pressure from tax, VAT and PAYE while the CVA is prepared. •A company voluntary arrangement can quickly cut costs. •Company voluntary arrangements can terminate employment contracts, leases, onerous supply contracts and all with NIL CASH COST. •You can terminate landlords leases with NIL cost with a well written CVA! Unilaterally walk away from the lease, using our expertise. •You can terminate directors or managers contracts too. •Terminate onerous customer contracts. •Board and shareholders generally remain in control of the company. •Much lower costs than Administration or Pre-pack Administration