Aviation Services Company Parent Company Files For Bankruptcy

The Challenge

A UK-based service company, which provided cabin staff for its European parent company, faced a sudden and catastrophic collapse. The company’s sole purpose and source of income vanished when its European parent filed for bankruptcy. With no other contracts and creditors now pressing for payment in the UK, the company had no time to restructure or seek new work. The demise of its parent effectively brought things to a close in the UK. Given the critical position of the business, the remaining directors, both UK and European-based, had to consider their duties and responsibilities, which were now complicated by the parent company’s legal issues. The business was on the verge of failure with no clear path to recovery.

The Solution

The UK-based director contacted RMT KSA to discuss the company’s rapidly deteriorating position. After an in-depth meeting, we provided a detailed assessment of the situation and outlined the available options. It quickly became clear that due to the critical nature of the business’s position and the lack of time to find new contracts, restructuring was not a viable option. The directors, therefore, made the difficult but necessary decision that liquidation was the only remaining option. They chose to proceed with a Company Voluntary Liquidation (CVL), which is a formal process for a solvent or insolvent company to wind up its affairs in an orderly manner. This approach would allow matters to be dealt with quickly and professionally, which was a top priority for the directors.

The Results

The decision to enter a CVL allowed for matters to be handled in a professional and efficient manner. The appointed liquidator acted quickly to deal with the European lawyers handling issues related to the parent company’s bankruptcy. The liquidator also disclaimed leases on two offices at different airports and dealt with any remaining staff and UK creditor issues. Although the outcome was a liquidation, the process allowed the UK-based director to get on with his life, having fulfilled his duties to the company and its creditors. The CVL provided a clear and orderly conclusion, which ultimately maximized the interests of the creditors by preventing a more chaotic outcome. This case demonstrates that even when a business cannot be saved, a formal liquidation process can provide a clean and professional way to wind down a company responsibly.