Digital Branding Agency Hit By Reduced Client Spend

The Challenge

A London-based digital branding consultancy, operating as a Limited Liability Partnership (LLP), traded successfully for seven years before experiencing a severe downturn in business from late 2016 through 2017. The decline was caused by a combination of factors, including reduced client budgets, non-renewed memberships, and increased competition. Although the company implemented cost-saving measures, such as reducing overheads and offering competitive rates to retain clients, a persistent cash flow shortfall remained. The LLP’s reliance on term loans and an overdraft proved insufficient, leading to a desperate need for a significant restructuring of both the business and its debts.

The Solution

The LLP’s designated members contacted RMT KSA for advice. After a full review of their options, they decided to propose a Company Voluntary Arrangement (CVA) to their creditors. During the exploratory phase, it was discovered that one of the members had provided personal guarantees to several unsecured lenders. Recognising that this individual couldn’t repay these claims, RMT KSA structured a connecting Individual Voluntary Arrangement (IVA) to run concurrently with the CVA, offering a comprehensive solution for both the business and the individual.

The Results

The meticulously structured CVA and IVA proposals were both successfully approved by creditors in April 2019. The LLP committed to repaying 43 pence in the pound to its unsecured creditors over a five-year period. This coordinated approach allowed the business to continue trading, and the designated member to avoid personal bankruptcy, providing a viable path forward for both parties.