Midlands Based Design Company

Incorporated in 1999, the company provides design and manufacture solutions utilising digital systems and automated hardware to fast track the development of products to market.
The Company contacted KSA after reading the website. A meeting was held in November 2008 and then a second meeting in December between the directors and KSA managing director, Keith Steven. KSA were then appointed to assist with proceedings.
Turnover for the 2008 financial  year was £4.8m

The company encountered financial difficulties due to:

1. A downturn its primary sector.
2. The reduction of invoice discounting against its largest customer.
3. Being over-geared and undercapitalised. The company’s largest customer has suffered publicised cashflow problems

The board identified that cashflow would become a problem and had been looking at several options to refinance, sell equity in or restructure the company. The board had already identified these issues prior to KSA’s appointment and recognised that severe cash flow pressures lay ahead. They decided a longer term radical strategy was necessary.

This case necessitated that KSA liaise with many of the company’s very high profile clients. Due to the size of the potential exposure to the bank on this case, it was necessary in the latter stages to liaise and work with one of the insolvency organisations on the bank’s panel.

Premises

The company operated from 2 premises, one leased and one owned by the company, however the company had a large amount of loans secured against this property.

Employees

KSA assisted with 4 redundancies which meant that 21 jobs were saved.
Bank & Financial facilities:

• Bank held debenture fixed and floating charge
• Overdraft facility £650K on which was owed c£400K
• Loans secured against the freehold property of £1.9m
• The directors had also provided personal guarantees
• The company had an invoice finance facility with a fixed and floating charge on which was owed c£320K

Unsecured Creditor debt:

– £1m (70K of which HMRC was 48%)
The CVA was approved by 99.7% of the creditors at the creditors meeting in April 2009 with a proposed dividend of 46p in the £1

In January 2011 the company made an offer to the creditors to exit the CVA early which was accepted.  The creditors ultimately received 30p in £1 in just under two years.