Transport Company Facing Difficulty Following Foray Into Direct Home Delivery

The Challenge

A long-established South Eastern transport company, providing operations across Europe and UK, which had expanded over the years to include direct home delivery for high end furniture/retail clients and an overnight pallet network, ran into severe financial difficulty.

While the company was known for its successful Just in Time offering along with innovative technology and strong customer service, its expansion into direct home delivery proved to be a costly mistake. This was due to key retail customers entering administration around 2017, with other customers exploring cost cutting methods and then overall worsened by operation suspensions through COVID-19 lockdowns. The saturated pallet network did not come to hand. The company became financially distressed, facing high costs, the need for extensive redundancies, and a significant directors’ loan of £200,000, which prompted a full-scale restructuring effort to downsize operations and exit failing contracts and properties.

The Solution

Following insolvency tests that showed the company was both balance sheet and cashflow insolvent, the company engaged RMT KSA to explore rescue options. It was felt that with creditor pressure removed, an investment in sales and marketing and some sales conversions, sales would rise. Therefore, a Company Voluntary Arrangement (CVA) was deemed the most appropriate way forward, bringing the best solution for all parties.

As part of the restructuring plan, all direct home delivery operations were suspended to allow the company to focus on its more profitable core European arm. RMT KSA assisted in making 58 redundancies, negotiating property exits, and significantly reducing the company’s cost base, including terminating costly vehicle leases. This was a particularly complex CVA case, as the entire process had to be conducted remotely due to lockdown and social distancing measures.

The Results

The CVA was successful, with creditors agreeing to be repaid via a one-off payment of c£500k in 2021. This outcome surpassed the initial proposal of 35p for every £1 owed over a 5 year period, providing a faster and more favourable return for creditors than a terminal insolvency would have.

The company was then able to focus on its core profitable operations, particularly within the niche sectors of motorsports, automotive, aerospace and events. This strategic redirection let to the business’s recovery and growth, ultimately resulting in a merger and acquisition in 2025. In addition, the CVA successfully preserved 33 jobs.

This case serves a powerful illustration of how a CVA can be a highly effective tool for complex restructuring, even during challenging times.