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CVA case study - marine hydraulics sector

29 September 2016

This company specialises in marine hydraulics and started having cashflow problems in late 2013. 
After the purchase of two smaller companies in 2013, it had been hoped that this would be the end of their cashflow problems. However, together with this purchase, an unsuccessful product launch and bad debts, the situation worsened.  

HMRC issued a winding-up petition in July 2015 which was paid by associated and connected creditor funds. Staff and costs were cut to try and deal with the cashflow pressures, but substantial restructuring was required. 

The company, who has several customers who are in the top 100 companies and are spread throughout the world, approached KSA for assistance. We recommended that they propose a CVA to the creditors.

With the help of the CVA, the company reduced staff numbers and exited premises that were no longer required. Creditor pressure was taken from the company as KSA dealt with calls from creditors chasing debt.  An associated creditor agreed to convert their liability into preference shares and the CVA dealt with more than 100 creditors. The CVA offered 35p in £1 and was accepted by the creditors, HMRC included.

The directors are confident that they can work through the CVA and once again become profitable as they have done in the past. 

Categories: CVA, What is a CVA or Company voluntary arrangement?

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