Scaffolding Company Suffered From A Burglary

The Challenge

A scaffolding company with a turnover of approximately £1.5m was facing severe financial and operational difficulties. The primary trigger was a burglary that resulted in the theft of key contract and accounting information. This led to a collapse in daily financial management and credit control. Two major new build contracts, worth £500k, accrued £270k in unpaid variations due to a lack of records and the finance director’s failure to collect the debt. The former finance director also failed to maintain compliance with HMRC, leaving a large unsecured debt of approximately £406.5k, with HMRC as the majority creditor at 59% (£239.5k).

The Solution

The director engaged RMT KSA in August 2012 to assist with a rescue. A Company Voluntary Arrangement (CVA) was proposed to restructure the company’s debts and allow it to continue trading. The CVA was used to terminate three finance agreements and address the unsecured debt. Additionally, the company had to deal with legal action from its landlord, who attempted to seize assets over a proposed vacation of the premises, which was successfully averted.

The Results

The CVA was a success, with HMRC approving the proposal on January 30, 2013. The CVA was expected to be approved by the body of creditors on February 18, 2013, with a proposed dividend of 48p in the pound. This dividend was bolstered by a planned £67k equity release from a property in the fourth year of the CVA. The successful rescue and restructuring allowed the company to save 19 jobs and provided a viable path forward.