Construction Company successful CVA

15 November 2013

Incorporated in June 2000 the company is a main contractor and sub-contractor with in the construction industry operating within both commercial and domestic new build and maintenance.

One of the directors, contacted KSA after reading the Website. KSA were appointed to assist the company on 14th August 2012The directors had both experienced an insolvency situation with a previous company trading in the same sector.

Over ambitious forecasts in the CVA led to the company having to go into liquidation. This was after just 10 months.

In the year to June 2012 the company turnover was c. £800k whilst it made a loss of c. £64k

The company was experiencing financial difficulty due to the following:
• Undercapitalisation,
• Interrupted contracts,
• Bad debts,
• A highly competitive environment
• Payments withheld c. £77k gross after a period of arbitration the directors decided, in light of a potentially costly legal battle, to accept a greatly reduced payment of £14k

What was the banks position
• No loan or overdraft facilities.
• Debenture registered 22nd September 2004 remains outstanding
• In fact account £14.5k in credit at SofA date

Unsecured creditors
• Total debt of c. £229.5 inc. HMRC at c. £208k (c90%)

Employees
• The CVA has meant that 9 jobs have been saved

HMRC initially rejected the proposal, however after an appeal to the Voluntary Arrangement Service by KSA HMRC approved CVA with standard modifications on 5th March 2013. The CVA was Approved by the body of creditors at the creditors meeting in Weymouth on 5th March 2013. With 90% of the unsecured vote HMRC had already assured this outcome. The dividend to unsecured creditors was 33p in £1.

Categories: CVA