Two Haulage Companies Had Poor Financial Controls

The Challenge

A specialist haulage and logistics company, in operation for 45 years family owned, was sold to a competitor. Post-sale, it was discovered that the financial reporting had serious errors, rendering both companies in the group insolvent. The company was characterised by a large invoice discounting exposure, poor staff morale, lack of a business plan, and was loss-making. The situation was critical, with the company running out of cash and unable to pay December wages.

The Solution

RMT was engaged and led a deep-seated restructure. This involved closing down unprofitable work, making approximately 20 people redundant, and cutting general overheads. A separate Company Voluntary Arrangement (CVA) was then proposed for each company to manage the debt burden. This also included fighting and defeating an attempt by the landlord to forfeit a lease on a depot and storage facility.

The Results

The CVA deals were approved by an overwhelming 98% of creditors, allowing for the repayment of 23p and 34p in the pound respectively. Despite initial struggles to become highly profitable, both companies made all their CVA contributions on time. Within two years, the parent company began to grow, winning new contracts and securing investment for a new fleet. By 2008, both companies had paid off their CVAs in full, demonstrating a successful turnaround from a near-collapse.