Company Sold For Millions After KSA Stopped Winding Up Petition

The Challenge

A successful company, Paralaw Limited, faced severe financial distress due to significant cash flow pressure and a substantial tax liability that had accrued with HMRC. This led to HMRC taking enforcement action and initiating a winding-up petition against the company. The company was on the brink of being wound up, which would have ended 10 years of successful trading. The director, Murray Duncan, was determined to save the business and needed to find a solution that would not only protect the company but also allow it to continue trading and address its financial obligations.

The Solution

To protect the company’s position, it was placed into Administration with the help of RMT KSA. This legal process allowed the company to continue trading while a rescue plan was devised. For 18 months, RMT KSA worked closely with the director and his management team to streamline and enhance the company’s financial and administrative control procedures. This focused effort quickly returned the company to profitability. The strong track record of successful trading during this period satisfied both clients and creditors, providing the confidence needed to transition the company out of Administration. The company was then exited from Administration via a Company Voluntary Arrangement (CVA).

The Results

The CVA provided the company with a structured plan to pay its HMRC arrears in full over a reasonable period. The new financial systems implemented during the Administration period became the foundation for the company’s significant growth over the next 10 years. The company thrived and, in a remarkable turn of events, was eventually sold for millions of pounds to a large US investor. This case is a powerful testament to the effectiveness of the strategy: Administration was used as a temporary protective measure, followed by a CVA to formalize the debt repayment. The approach not only saved the company and paid all creditors in full but also enabled it to grow exponentially, leading to a highly successful sale. The director credited RMT KSA’s clear and well-communicated strategy for the company’s survival and ultimate success.