Insulation Company Suffering From Slow Paying Government

The Challenge

A building insulation and treatment company, incorporated in 1979, was experiencing significant financial distress. Despite a solid business opportunity as the sole UK distributor of a unique wall coating product, the company was plagued by under-capitalisation and over-trading. The situation was exacerbated by severe cash flow problems caused by delays in receiving payments from the Government Green Deal scheme, which took 6-8 weeks for 50% of the money. This led to an inability to pay for materials and labour. The company had failed on a previous Time to Pay arrangement with HMRC, and was 14 months behind on its leased premises’ rent.

The Solution

The company’s director contacted RMT KSA in December 2013 to find a solution. In an attempt to reduce costs, all staff were made redundant, with labour to be contracted in as needed. However, the director became increasingly difficult to contact, preventing any real solution from being implemented. Despite RMT KSA’s attempts to re-engage, including an ultimatum, the director did not respond.

The Results

Due to the director’s lack of cooperation and eventual non-contact, RMT KSA was forced to resign as the company’s advisor in April. No rescue or recovery plan could be implemented, leaving the company’s future uncertain and likely headed toward terminal insolvency (liquidation) as a result of its financial difficulties and the director’s failure to engage with a professional turnaround firm.