South East Internet Retailing Company Rescued

15 November 2013

The company was incorporated in 2010 and trades from its premises in the South East of England. The director contacted Sarah Massey of KSA after reading the website. 

After a subsequent telephone conversation with KSA regional manger, Gary Weber, a meeting was requested and held between the director and general manager of the company and Gary Weber of KSA group.

KSA were appointed to assist the company with the production of CVA proposals on 8th April 2013. Turnover to 31st March 2013 was c. £1.6m which is an increase of £163k year on year. However, the gross margin for the same period fell by £93k

The company is encountered financial difficulties due to a downturn in the market as a result of unseasonal weather in the last quarter of 2011 and the resultant 'knock on effect' to date. 

The board identified this problem in February 2013 and decided to take professional insolvency advice from KSA to try and deal with the resultant cash flow pressures.

The bank: secured with debenture first registered 2011 provided: 
• £30k overdraft facility: At SofA date the account was overdrawn by 21K.
• Two accounts Sterling and Euros.

Unsecured creditors

Total debt of £239k inc. HMRC at £132k (c. 55%) 

The unsecured debt included £26.5k which was demanded by the German Tax Authority; the company disputed this being owed because sales into Germany had not passed the requisite 100,000. This could not be recovered under German Law because the company is not registered in Germany. 

Under EU law the German Tax Authority then requested that HMRC to recover this on their behalf. The company lodged an official dispute with the German Tax Authority which meant that all action would be halted whilst this was considered. 

In the meantime the CVA was filed at court and subsequently approved. Therefore if the German Tax authority could prove their debt then it would be bound into the CVA and no further action could be brought. 

Landlord

KSA also assisted with the vacation of the company's premises and their move to less expensive offices.
Rent arrears were included on the creditors list. As were 12 months future rent and rates and contingent balances for dilapidations and utilitiesThe CVA meant that 5 jobs have been saved . 

HMRC approved the CVA with standard modifications on 27th September 2013. - The CVA was approved at the creditors meeting on 10th October by the body of creditors with a dividend of 47p in £1

Categories: CVA