This client is a manufacturer of vet and medical lighting based in the southeast of England. After many years of not replacing its range the owners decided to invest heavily in new products.
The investment required was identified and the plan begun. But sales fell quicker than expected, profitability disappeared and losses mounted. Development took longer than planned and the business lumbered towards the precipice.
As part of this process the group that owned the company invested over £300,000 in the venture, BUT this led to pressure on another company in the group. Both became insolvent.
KSA structured two rescue deals with the CVA used as the framework. The bank was very nervous but Keith Steven met with the bank and other finance houses to assure them of the recovery plans. But the company had two factories (side by side) and only needed one in the new plan as most manufacturing processes were streamlined and or outsourced.
The CVA was prepared, the landlord notified and invited to attend the creditors meeting. The landlord did not attend and the companys CVA was approved by 98.7% of creditors. 3 months later KSA advised the company to exit the unwanted unit to cut costs. With rent of £36,000 and rates of £11,000 this would be a good boost to profits.
KSA notified the landlord that the company had handed back the leases and the company offered to pay for bricking up the mutual access between the buildings. This was agreed and the company is now profitable and prospering.
The new ranges are working well and sales (although behind budget in the first 4 months) now exceed budgets.
KSA Group believe that this approach is very powerful and has been very rarely used by other insolvency or turnaround advisors (if at all).
CALL US NOW IF YOU WANT TO SOLVE A SIMILAR LEASE OR ONEROUS CONTRACT CALL 0800 9700 539. KSA IS THE UK'S LEADING TURNAROUND FIRM.
Categories: CVA, What is a CVA or Company voluntary arrangement?