Haulage and Logistics Company Needing To Make A Profit

The Challenge

A haulage and logistics company with £7 million in sales was struggling to return to profitability. The business was burdened with overcapacity, specifically a nearly empty warehouse that was a significant financial drain. The company also had a portion of its haulage business that was no longer efficient. This situation was exacerbated by a number of non-essential costs that were putting a strain on the company’s finances. The directors knew they needed to restructure and cut costs, but the process was complicated by the need to maintain essential operations, including a core logistics service with long-term contracts. They needed a strategic and legally sound way to address these issues without putting the entire business and its workforce at risk.

The Solution

The company engaged RMT KSA to lead a comprehensive restructuring of its operations. The strategy centered on using a Company Voluntary Arrangement (CVA) to implement the necessary changes. The CVA provided the legal mechanism to exit the unprofitable, nearly empty warehouse. As part of the plan, a portion of the associated haulage business was closed down and its services were outsourced, which helped to further reduce overheads. The RMT KSA team worked with all key stakeholders, including landlords, HMRC, and the Road Traffic Commissioners, to ensure the plan’s viability and gain their support. The CVA was designed to not only reduce fixed and overhead costs but also to provide a better return to creditors than a liquidation. Importantly, it allowed the company to retain its Vehicle Operators Licence, which would have been at risk in a pre-pack administration.

The Results

The CVA was approved, with an overwhelming 96% of creditors voting in favor of the arrangement. The company was able to successfully exit the unwanted warehouse and outsource its unprofitable haulage operations. These decisive actions led to the preservation of 57 warehouse and driving jobs. The CVA provided the company with the financial breathing room it needed to return to profitability. The case is a powerful example of how a CVA can be the perfect tool for a company with a strong core business but unsustainable costs. By using the CVA to shed unnecessary overheads and liabilities, the company was able to protect its core operations, save a significant number of jobs, and ensure its long-term survival and viability.