The Midlands based company was incorporated in 2008 and traded from a residential garage until 2010, when it moved to a local business park and purpose built unit.
The company supplies replacement glass for national coach and bus companies. Problems started in the fourth year of trading after agreeing to supply one of the country’s largest and well known coach and bus service suppliers with glass as well as the fitting service they currently supplied. They agreed to this extra service and everything worked well for a period of time. The payments from their customer started to slow due to the procedures put in place by their customer. This caused a problem with their draw down from the factoring company so cashflow started to suffer, leading to problems with their ability to pay their creditors on time.
Shortly after this, two of the directors felt it would be best to resign from the company.
The company started to incur large costs for fuel and travel due to their customer’s depots being further afield. This led to a drop in response time and their ability to service local jobs. The decision to resign from the contract was taken in 2012. This also led to a number of redundancies.
In addition to the problems described above, the company also experienced internal problems with respect to its book keeping and submission of returns to H.M. Revenue & Customs (HMRC). In particular, as a result of the book keeping errors and incorrect VAT return submissions, the company came under pressure from HMRC. A new financial person was brought into the company to assist with getting the book keeping back on track. It was found that the company’s debt to HMRC was significantly less than the amount being requested by HMRC.
HMRC issued a Winding Up Petition (WUP) against the company in September 2013, the hearing of which was successfully adjourned to allow KSA time to complete the CVA and hold a creditors meeting.
A creditors meeting was held in October 2013 and the CVA was accepted by the creditors for 100p in the £1 over 5 years.
Categories: CVA, What is a CVA or Company voluntary arrangement?