Scottish Haulage Company Threatened by Winding Up Petition

The Challenge

A Scottish haulage company, run by a sole director who preferred driving and being on the road to paperwork, faced a crisis due to his lack of interest in administrative tasks. The company had no internet connection in the office and a part-time bookkeeper, which had very limited abilities in a non-connected office. Ultimately this led to a large debt of £44K owed to HMRC for PAYE and VAT, with much of it consisting of penalties and surcharges. The debt was old, dating back to 2009 for PAYE and 2007 for VAT. The only other creditor was Companies House, owed £3K.

The Solution

The company engaged RMT KSA, and firstly the regional manager persuaded the director to install an internet connection and increase the bookkeeper’s hours to ensure proper record-keeping. Due to poor cash flow, the CVA process was slow. RMT KSA had to provide a draft CVA document to HMRC in May to prevent them from issuing a winding-up petition. The CVA proposed a 100p in the pound repayment to unsecured creditors over a five-year period.

The Results

HMRC approved the CVA with a crucial modification: the connected creditors had to write off their debt once the CVA was approved. The original proposal was for the connected creditors to convert their debt to redeemable preference shares and be repaid after the CVA was completed. The approved CVA allowed the company to move forward with a manageable debt repayment plan and a commitment to better financial compliance.