This company was incorporated in February 2006. One of the director’s contacted Sarah Massey of KSA, to discuss the company’s present financial situation. After a subsequent telephone conversation with KSA regional manager, George Davis, a meeting was held. KSA were appointed to assist the company in May 2014.
The company is a provider of healthcare workers to the ‘at-home’, ‘live-in’ and palliative care market.
Turnover for the 2013/2014 financial year, as detailed in the draft accounts, was of £1.1m which is c£300K up on previous year. During the first year of the CVA similar level of sales were forecast.
The company was encountering financial difficulties due to:
- Poor financial management and financial reporting.
- Managing director’s long period of illness.
- A period of significant and recent business growth and increase in complexity in the operational day-to-day management of the business.
- Large debt c£200K owed by connected company
- The company operates from leased premises.
- 81 jobs were saved with no redundancies
Bank & Financial facilities
- There were no secured creditors
- The company had no loan facilities.
- The company had no overdraft facility and the account was maintained in credit
- There were no other financial facilities at the time
- The director’s had provided no Personal Guarantees (P.G’s)
- The directors had accrued an Overdrawn Director’s Loan Account (ODDLA) of c£38K
Unsecured Creditor debt:
- £184K of which HMRC was 100%
The company was served with a Winding Up Petition by HMRC in late May 2014 with a hearing date at the end of June. The directors appointed legal representation to assist with gaining an adequate adjournment period.
The nominees review took place on 11th June 2014 at KSA’s new Bishopsgate office.
The CVA was filed at court on 13st June 2014 and subsequently distributed to all creditors. It was rejected by the HMRC prior to the creditors meeting which was due to be convened onat the start of July with a proposed dividend of 77p in £1.
However, section 7 of the CVA detailed that once the connected debtor company had been paid then those funds would be made available to the company (which would in turn be made available to the supervisor of the CVA for the benefit of the creditors). In effect, this would make the CVA 100% repayment.
At the Winding Up Hearing date at the end of June, the appeal for a 6 weeks adjournment was rejected by the court and 3 weeks were granted until 21st July
The Creditors meeting was adjourned until 18th July. HMRC informed that the director was considering amended proposals. The winding up petition was advertised on 9th July 2014.
The amended proposal was submitted to HMRC and the new proposal was accepted by HMRC in July as a modification to the CVA.
At the adjourned creditors meeting on 18th July, the director informed the chairman that he no longer wished to propose a CVA and would apply to HMRC directly to pay the debt in full.
The Chairman of the creditors meeting therefore treated this as a rejection and informed HMRC.
The debt was settled in full prior to the adjourned winding up hearing date on 21st July and the petition was dismissed.
Categories: CVA, What is a CVA or Company voluntary arrangement?