The directors of the company contacted KSA Group in September 2012 to discuss the company’s financial position. The company was incorporated in August 2003 by 6 directors, all of which were friends and family. The company traded from a retail premises in Essex.
Whilst the company traded at a small profit, driving the business to maximise its potential was not the main focus but it was covering all of its overheads.
The main cause for the company’s fall into insolvency was due to the change in the structure of a retail centre in Essex as a new one opened up in the area. This meant that many of the local retail businesses relocated to the new shopping centre and the general footfall of customers was significantly reduced.
The company employed a small number of full and part time staff including one of the directors as a full time shop manager. All of these staff had been employed by the company since its incorporation in 2003 and the company could not afford to make the staff redundant as a way of cutting costs.
During this time, HMRC had agreed an informal “VAT holiday” with the company in 2008 and didn’t chase the company for VAT returns from this point.The directors calculated that the VAT owed to date would be c£47k along with trade creditor arrears including the landlord of c£9k. This prompted the directors to seek professional insolvency advice.
At our meeting in September 2012, the directors were seeking a way to shut the business down and repay its creditors while avoiding a formal liquidation process. The business was failing and the directors no longer wished to carry on and make the creditors position worse but felt that they could have a closing down sale and raise as much cash as possible to offer a full and final settlement to the creditors and staff alike. A solutions letter outlining the options available to the company was issued to the directors shortly after our meeting.
The directors made contact again in April 2013 after realising that the company was not going to be able to avoid terminal insolvency and appointed KSA Group to liaise with and produce and full and final statement of affairs for the company’s creditors. A creditors meeting was called and KSA Group’s licenced insolvency practitioners Eric Walls and Wayne Harrison were appointed joint liquidators by the company’s creditors on 5th April 2013.
Categories: Liquidation, Complete Guide to Creditors Voluntary Liquidation CVL