Talk to us today in confidence0800 970053907833 240747

CVA case study - Midlands building services company

2 June 2014

This company was incorporated in July 2011.

One of the directors contacted Keith Steven of KSA to discuss the company’s present financial situation. Then, after a subsequent communication with Sarah Massey of KSA, a meeting was arranged with KSA Regional Manager, George Davis, and held at the company’s premises.

This is a joinery and carpentry company generally providing services to sub-contractors.

KSA were appointed to assist the company in late March 2014. Turnover for the 2013 financial year was of £410 with a loss of £11.5K.  However, due to radical restructuring, stricter estimation policy and change in operations, sales were forecast to be £410K with a gross profit of £298K.

The company was encountering financial difficulties due to:
- Purchasing aging assets and goodwill of previous company from the liquidator
- Two relatively small contract failures
- Slow payment receipts.
- Failure of ambitious time to pay arrangement with HMRC

- The company operated from premises within the directors’ home 

- Apart from the 2 directors the company had 1 other employee;  labour was contracted in as necessary.

Bank & Financial facilities
- The company had no loan facility
- There is an overdraft facility however the account was maintained in credit 
- The bank held no security
- The directors had provided no personal guarantees
- There were no other financial facilities

- It was believed there was an overdrawn Directors Loan Account  of c£50K however this remained to be reconciled. 
- Both of the directors had been involved with a previous recent insolvency.
Unsecured Creditor debt:
- £106 of which HMRC was 86%

Since HMRC debt had been accruing for c18month and the time to pay arrangement had not been adhered to, HMRC served a Winding Up Petition on the company in late May 2014 with the hearing scheduled for late June.

Due to the nature of the construction industry, when a major client of the company discovered that a Winding Up Petition had been served, the contact worth c£60K was terminated with immediate affect.

At this stage the directors decided, due to the loss of turnover, to cease their intensions to propose a CVA, stop trading and permit the winding up petition to continue and ultimately liquidate the company.

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

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!


A Worried Director

The Ultimate Guide For Worried Directors

Worried about poor cashflow? Feel you have got into a bit of a mess? Covid-19?, How to pay wages on pay day? For reassuring advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539

You are currently offline. Some pages or content may fail to load.