The director of the company contacted Sarah Massey of KSA to discuss the company’s present financial situation. Then, after a subsequent telephone conversation with KSA regional manager, Hugh Gabriel, a meeting was requested and held at the company’s premises.
The company operates within the landscaping sector and specialises in domestic gardening services. KSA was appointed to assist the company with a Company Voluntary Arrangement (CVA) in late 2014. Turnover for the previous 12 months had fallen by c£80K, to c£300K.
The company was encountering financial difficulties due to:
- Rapid an expansion
- Excessive overheads and
- A large bad debt.
- The company operates from the directors’ home and associated business premises.
- The company also rents two other units
- The company employs 18 staff including the directors
- The work force was reduced by a total of 5 during late 2014.
Bank & Financial facilities:
- The bank provided an overdraft facility of c£40k which was secured by a fixed and floating charge over the company’s assets.
- There was also an outstanding unsecured loan of c£10K
- There were 5 outstanding financial agreements in respect of motor vehicles.
- The directors had provided Personal Guarantees (P.G) to the bank in respect of the overdraft facility.
- The directors made loans of c£7k available to the company and were therefore classed as connected creditors: It is a usual HMRC modification (condition of acceptance) that all connected creditors agree to waive there claim to any monies owed and that claim does not survive the CVA.
Unsecured Creditor debt:
- c£130K of which HMRC was 92%
- Cost & overhead reduction
- The workforce was reduced to cut costs.
The company had administration issues to rectify to ensure that connected businesses were kept separate. Early in 2015, after a review of the company’s current position, the director decided he no longer wished to continue with the CVA and that the company could continue without further assistance from KSA.