Like almost all of KSA's clients this company nearly left it too late to effect a rescue. After a major fall out, the investors (a venture capital company and private investors) introduced a new Chairman who then removed the MD. 2 months of acrimony followed and a compromise agreement was reached between the ex-MD and the company.
Sales fell sharply after a problem with the product and the backers refused a new round of funds.
KSA proposed that the debts that had been built up should be frozen to allow the company to issue v3 of its software. The company had debts of £70,000 with the Revenue and £30,000 to VAT. Around 25 other suppliers to the business had debts of £150,000. The business's directors prevaricated on the CVA decision and things got worse. The bank was at the limit and loans were not being repaid.
The ex MDs compromise agreement was breached and he issued a winding up petition (see compulsory liquidation) this finally led the board to appoint KSA to undertake the CVA. Whilst almost too late we were able to deal with 3 petitions, 5 CCJs and very aggressive creditors. We negotiated a deal with the bank and new investment was promised if the CVA was approved. Despite the best efforts of the ex MD we did get the CVA approved and the company was protected!
Some 3 months into the CVA the sales were still weak but the new version of the software was launched and well received. Investors put in the new capital and a new investor also came to the table with 75,000, this new money was not available to the creditors in the CVA.
Come March 2004 the company was profitable and cash positive for the first time in 22 months, the ex MD has had some of the debt bound by the CVA and the company is now the subject of due diligence for further funding as sales grow quickly.
Update, this company has now been purchased by the main competitor (2007).