Garden Services Company Faced A Bad Debt

The Challenge

A Hampshire based landscaping company specialising in domestic gardening services faced financial difficulties despite its turnover of £300K. The company was undercapitalised from the outset and suffered from a combination of rapid expansion, excessive overheads, and a large bad debt. The company’s staff was already reduced by five people in late 2014, and it had a secured overdraft of £40K, a £10K unsecured loan, and five motor vehicle finance agreements. The directors had also provided personal guarantees to the bank, and the company owed approximately £130K in unsecured debt, with 92% of it owed to HMRC.

The Solution

The director contacted RMT KSA, and after an initial meeting, RMT KSA were appointed in late 2014 to assist the company with a Company Voluntary Arrangement (CVA). This solution was intended to provide a structured way to deal with the overwhelming debt and stabilise the business.

The Results

The company’s CVA process was ultimately unsuccessful. In early 2015, after a review of the company’s position, the director decided to discontinue the CVA, believing the company could manage without further assistance from RMT KSA. This decision to stop the CVA process meant the company did not restructure its debt and was left to deal with its financial problems independently, without the benefit of a formal arrangement with its creditors.