Agricultural Service Company Hit By Low Milk Prices

The Challenge

A long-established farming sector business, specialising in cow chiropody and foot trimming, faced a series of challenges. After surviving the 2001 Foot and Mouth outbreak by diversifying, and the 2008-9 financial crisis with a dip in sales, the company decided to expand its product line. However, after incorporating in 2011, it was hit by a significant drop in 2013 turnover due to financial difficulties within its customer base, caused by decreased milk prices and increased feed and input costs. The director was slow to react to the crisis and delayed implementing necessary overhead reductions and redundancies. This resulted in mounting historic creditor debt.

The Solution

The director sought help from RMT KSA, who were engaged to assist with a Company Voluntary Arrangement (CVA) proposal. The CVA was used as a tool to restructure the company. As part of the process, necessary redundancies were made, and the associated costs were included within the CVA. With RMT KSA handling the creditor negotiations, the director was freed from daily stress and could focus on developing the business. This included expanding the product range with new technology, designing a new website, and leveraging social media to stay connected with customers.

The Results

The CVA proposal was accepted by the company’s creditors. The company successfully restructured, making necessary overhead cuts and stabilising its financial position. The director was able to concentrate on the business’s core strengths, leading to a strong order book going forward. The CVA served as a crucial tool to resolve the historic debt and allow a fundamentally sound business to survive and adapt to a changing market.