The company was incorporated in 2006 and operated in the refrigeration sector. Having a proven track record in engineering, design contracting and consultancy within the refrigeration and air conditioning markets the company traded successfully, forging strong relationships with high end clients.
In 2012, the company took the decision to rebrand. This was successful and in the first year of rebranding the company’s turnover increased to £2.7m. Towards the end of that year there was a decrease in trade with consistency being replaced by peaks and troughs.
As a result the decision was taken to diversify into additional sectors which would suit the company’s core business and employee skill sets. A feasibility trial was undertaken. This was successful. The refrigeration sector was in gradual decline and this diversification had the effect of limiting the impact of that decline.
Unfortunately in October 2013 one of the company’s largest debtors became insolvent with the company losing a sum in excess of £169k. In addition other bad debts began to materialise.
A further review of the business was carried out and the decision to engage KSA was taken. One of the company’s strengths was a strong vision, a carefully constructed business plan and the ability to take that vision forward.
During the forecasting process it became clear that one of the company’s offices was unprofitable. The decision was taken to close that office which unfortunately entailed a number of redundancies. Sums due in respect of the redundancy were bound into the CVA as were any costs occasioned by the office closure.
The closure also resulted in one of the directors being removed from the board. The various processes in connection with that process were followed and employment law carefully adhered to. As a result of this closure, overheads have been cut with substantial savings to the company forecasts.
The detailed CVA proposal document was accepted by creditors at the creditors’ meeting. The director’s strong vision and a carefully framed business plan were the foundation of a successful restructuring.
Categories: CVA, What is a CVA or Company voluntary arrangement?