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CVA Case Study Film and TV Editors

15 November 2013

This company was state of the art in its technology and buildings but had an autocratic chairman who certainly knew best!

The executive directors approached us for advice through the internet and quickly we struck up a good rapport. When they arranged a meeting with our MD, Keith Steven, the Chairman cancelled it summarily! In time the fact that a bailiff (sent by the HMRC) arrived threatening to take away equipment, meant that the board did meet with us.

They had such a typical problem, over spent on new building and kit, under sold to clients. Ran out of cash and could not pay the asset based lenders for the equipment or the PAYE/VAT.

We proposed that a CVA would calm the waters with creditors but that the company had to be restructured. The chairman reluctantly agreed to the suggested solutions. The youngish directors were a bit overawed by him and although wanting to run with a KSA non executive director to drive the business restructure, he vetoed that as well.

The CVA was approved despite the chairman literally shouting at the Bank saying it was effectively their fault that the company could not draw down enough money from factoring! When, to be honest, the sales were not coming in. In our opinion Barclays were doing a pretty good job in supporting this crisis situation.
We worked with Barclays Business Support on this one, they have dedicated turnaround specialists in their teams and are not fools, yet the chairman felt by shouting really loudly they would do as he said!
The company struggled through the rescue period and the CVA was approved in November 2004.

Once again the directors agreed with the terms of the CVA that saw the CVA as step one, to be followed by KSA implementing a hands on turnaround plan and appointing Keith Steven to their board as a non executive director to drive the future planning. The chairman, for the third time decided he knew best.

This guy only owned 16% of the business but was a big noise (literally) in the film / TV editing world. So he would drive the changes and everything would work. So despite several attempts to restructure the CVA and the board effectively sacking the chairman in late 2005 the company ran out of time in early 2006.
A great shame, in our view, the CVA was well structured and offered only 29p in £1, so it was not the repayment levels that were the problem. There were good people and the basics of a good business were in place, but the chairman blocked change at every turn.

In our view if they had removed him right at the beginning of our involvement, I suspect they would be in year 3 of the CVA now and performing well. Our normal role is to advise directors and help rescue the company - not run the company day to day unless you as directors or members mandate us to do so. So in this case we could only point out the problems.

So the moral of this failed company, don't let a bully wreck your business, stick to the game plan that we agree at the beginning (they are not always right of course and sometimes need changed) and see through on management changes. Or strong management is not about the most noise.


Category: CVA

Flowers Sent By A Client!

Bouquet of Flowers

We agreed a 2 year Time to Pay Arrangement with HMRC for a client.  They sent some lovely flowers today

A happy client created this cartoon strip for us!


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