This company was incorporated in April 2010 and is a provider of highway maintenance services. The company secretary contacted Eirlys Lloyd of KSA to discuss the company’s present financial situation. After a subsequent e-mail exchange with Malcolm Gray of KSA, a meeting was requested and held in November 2013.
KSA was appointed to assist the company in late November 2013.
Turnover for the 2013 financial year, was of £2.5m which is 107% up on previous year. During the first year of the CVA, sales were forecast to rise again to £3.1m.
The company was encountering financial difficulties due to:
- Its quick expansion and increase in associated overheads combined with being undercapitalised
- Inadequate invoice finance facility combined with large debtor book with slow payment history
- management issues within the credit control department.
- HMRC and trade creditor debt has accrued past manageable levels agreed a Time To Pay (TTP) arrangements have proved un workable leasing to threats of winding up proceedings.
- Poor financial management and financial reporting.
- The company operates from several leased premises.
- 59 jobs were saved with only 2 redundancies
- Their bank and Invoice finance facility are secured via debentures.
- The company had no other bank loan facilities. However there were various company asetts subject to finance.
- The company had no overdraft facility and the account was maintained in credit
- The company has a credit card facility from the bank which is secured as above.
- The director’s had provided Personal Guarantees (P.G’s) in respect of the companies various asset lenders.
- Some of the directors had made loans available to the company, which If the CVA was approved by the creditors at the CVA creditors’ meeting the directors, connected (associated) creditors, had agreed to waive their claims in the CVA and also agreed their debt will not survive the CVA. this is a usual modification (condition of acceptance) by HMRC
Unsecured Creditor debt:
- £876,233K of which HMRC was 93.5%
The nominee’s review took place in late April 2014
The CVA was filed at court in early May and distributed to the body of creditors.
HMRC rejected the CVA. KSA replied to the rejection to satisfy points raised however HMRC declined to change the decision.
The company has now been placed into CVL (Creditors Voluntary Liquidation).
Categories: CVA, What is a CVA or Company voluntary arrangement?