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Southern Based Garden Services company

13 March 2018

The director of the company contacted Sarah Massey of KSA to discuss the company’s present financial situation. Then, after a subsequent telephone conversation with KSA regional manager, Hugh Gabriel, a meeting was requested and held at the company’s premises.

The company operates within the landscaping sector and specialises in domestic gardening services. KSA was appointed to assist the company with a Company Voluntary Arrangement (CVA) in late 2014. Turnover for the previous 12 months had fallen by c£80K, to c£300K. 

The company was encountering financial difficulties due to:

  • Undercapitalisation
  • Rapid an expansion
  • Excessive overheads and 
  • A large bad debt.

Premises

  • The company operates from the directors’ home and associated business premises.
  • The company also rents two other units 

Employees:

  • The company employs 18 staff including the directors
  • The work force was reduced by a total of 5 during late 2014.

Bank & Financial facilities:


  • The bank provided an overdraft facility of c£40k which was secured by a fixed and floating charge over the company’s assets.
  • There was also an outstanding unsecured loan of c£10K
  • There were 5 outstanding financial agreements in respect of motor vehicles.

Director:

  • The directors had provided Personal Guarantees (P.G) to the bank in respect of the overdraft facility.
  • The directors made loans of c£7k available to the company and were therefore classed as connected creditors: It is a usual HMRC modification (condition of acceptance) that all connected creditors agree to waive there claim to any monies owed and that claim does not survive the CVA.

Unsecured Creditor debt:


  • c£130K of which HMRC was 92% 
  • Cost & overhead reduction 
  • The workforce was reduced to cut costs.

The company had administration issues to rectify to ensure that connected businesses were kept separate. Early in 2015, after a review of the company’s current position, the director decided he no longer wished to continue with the CVA and that the company could continue without further assistance from KSA. 

Categories: CVA, What is a CVA or Company voluntary arrangement?

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