The company encountered financial difficulties owing to the effects of a complex and large building project that effectively went bad in 2012/2011, and historically poor financial management.
Arrears to HMRC of c.£131k had built up, mainly due to the fact that the business had very poor financial record keeping. The directors admitted that they had little idea as to how bad things had become.
The directors took action to try and deal with the problems i.e. reduce costs, reorganise the financial management of the business and had even made an appointment of an internal financial controller.
Despite this, the company could not service its debts as they became due and sought assistance from KSA Group. Trade creditors c. £141.5k, HMRC c £114k, debtors c £82k. A CVA was proposed to the company's creditors. Whilst finalisation of the document was in progress, and despite regular updates provided to creditors, the company received a winding up petition issued by a leading building supplier. Negotiations by KSA prevented the petition from being advertised, which is a crucial step to stop the bank account being frozen.
KSA also assisted with new banking facilities, owing to their current bank refusing to provide a facility to the company.
The CVA proposal was filed and circulated and supported by the body of creditors.
Categories: CVA, What is a CVA or Company voluntary arrangement?