Electrical Contractor in Kent

The Challenge

An electrical services contractor in Kent faced financial difficulties due to slow-paying main contractors. The company was owed approximately £85,000 in certified payments, with some debts outstanding for over 16 months. This created a severe cash flow problem, leading to mounting debt and a winding-up petition being issued by a trade creditor. Despite the director having already cut costs through redundancy, the situation worsened when the petition was advertised, causing the company’s bank account to be frozen.

The Solution

The company engaged RMT KSA, who, in collaboration with the company’s solicitor, Lex Law, immediately sought to manage the crisis. An adjournment of the Winding Up Petition hearing was applied for and granted, providing crucial time to act. During this period, continued support from a principal customer who awarded the company a new £750,000 contract, was secured. A General Validation Order was obtained to unfreeze the bank account, and when the bank was initially reluctant, Lex Law intervened to ensure the account was unfrozen immediately. A Company Voluntary Arrangement (CVA) proposal was filed to address the company’s debts.

The Results

Despite the petitioner voting against the proposal, the CVA was approved by the majority of creditors after an 11th-hour negotiation, resulting in a modified dividend of 55p in the pound (an increase from the original 44p). Lex Law successfully had the Winding Up Petition dismissed at the adjourned hearing. The company, now with a restructured balance sheet, a new major contract, and its bank account unfrozen, is trading in a much healthier financial position.