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?