The director of the company contacted Keith Steven, Managing Director 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 in Southampton.
The company provided heating engineering services to both the domestic and commercial markets. KSA were appointed to assist the company with a Company Voluntary Arrangement (CVA) in September 2010.
Turnover for the year to August 2010, was c£454K. The company was encountering financial difficulties due to:
- Poor accounting
- A loss-making commercial contract in 2008
- The board identified this in January 2010 and had cut costs by reducing labour and overheads to try and deal with the resultant cashflow pressures
- The company leases combined Office and showroom premises on an ad hoc basis from the company’s former Managing director.
- The company employed 11 staff including the director
Bank & Financial facilities
- The bank was unsecured i.e. it held no legal charge over the company’s assets
- The bank provided no overdraft, loan or credit card facility.
- The director had provided no Personal Guarantees (PGs) to any third party
Unsecured Creditor debt:
- c£200K of which HMRC was 90%
- Business changes, cost & overhead reduction
- The company intended to increase the level of commercial work undertaken to increase individual contract margins.
- Restrictive covenants were introduced to prevent newly qualified personal leaving immediately after qualification, increasing return on investment
- Monthly staff meetings were to ensure the successful implementation and monitoring of the new strategies throughout the company
- Increased monitoring of customer care.
- A more efficient sales operation to ensure all leads are followed up adequately.
The nominee’s review was held and the CVA and nominee’s report were subsequently lodged at court. The CVA proposed 40p in £1 repayment to unsecured creditors over 5 years.
HMRC provided their response accepting the CVA. The CVA was then accepted by the body of creditors at the creditors meeting.
Categories: CVA, What is a CVA or Company voluntary arrangement?