Manufacturing Company Growing Too Quickly

The Challenge

A manufacturing company experienced rapid growth, from £3m to £12m in sales, which led to a state of management flux and resulted in significant losses between 2012 and 2013. The company’s financial position was chaotic, with disputed creditor balances and a lack of accurate management accounts. The business was out of control, with poor product quality leading to non-payment from customers, and aggressive creditors threatening legal action. The company was overstretched and unable to stabilise itself.

The Solution

The company engaged RMT KSA to address four key goals: restructure secured lending, restructure unsecured debts, buy time for management changes, and return the business to profit. Initially, the company attempted a Time to Pay (TTP) deal, but this proved impossible to manage due to the chaos. RMT KSA then initiated the Company Voluntary Arrangement (CVA) process to formally restructure unsecured debts, reduce fixed costs, and downsize the business. In parallel, new funders were introduced, replacing the existing bank and invoice finance provider within a week, which successfully relieved bank pressure and prevented a firm of accountants seeking an administration appointment.

The Results

Ultimately, a full rescue was not possible. The company’s problems were too deeply rooted in poor management across multiple departments, including accounting, administration, and production. The cry for help came too late, and the issues were beyond what a CVA alone could fix. The company was instead placed into administration and then sold to a private equity buyer in late December 2013. This outcome, while not a full rescue, provided a structured exit and allowed a new owner with stronger management to take over the business.

A lesson to note for all – don’t leave it too late to ask for help