The directors of the film-producing company contacted Eirlys Lloyd of KSA to discuss the company’s present financial situation.,Then, after a subsequent telephone conversation with KSA Managing director, Keith Steven, a meeting was requested and held at the company’s premises in April 2009.
KSA were appointed to assist the company with a Company Voluntary Arrangement (CVA) in May 2009. Turnover for the year to June 2008 was c£1.4M.
The company was encountering financial difficulties due to:
- Very sharp slow down in sales from the TV companies in the credit crunch and recession period of 2008-9
- The diversification into corporate films provided work when the TV work had dried up, but it created costs that were not recovered, specifically in the form of a sales manager who brought in a major client initially and then failed to deliver the promised sales.
- The company occupied rented premises in central London
- The landlord held a register rent deposit deed
- The company employed 3 staff including the director
- The company had made 6 redundancies
Bank & Financial facilities
- The bank provided an overdraft facility of c£45K
- The bank held registered security via a fixed and floating charge over the company’s assets
- The director(s) had provided Personal Guarantees (P.G’s) to thebank in respect of the overdraft facility.
Unsecured Creditor debt:
- £202K of which HMRC was 52%
Cost & Overhead Reduction
- The directors have reduced costs sharply as sales fell sharply. all of the employees have left the company except one, this was a necessary action but means the directors workload rose. Secondly the directors have taken very modest salaries and survived on eBay trading (SP) and remortgaging property (JL).
In August 2009 a major contract was withdrawn from the company whilst half complete. Realising the company was no longer viable, the directors contacted KSA to discuss placing the company in CVL (Creditor Voluntary Liquidation).
The directors engaged KSA to conduct the CVL in September 2009.
Categories: CVA, What is a CVA or Company voluntary arrangement?