Southern UK based recruitment business – CVA case study

The director of the recruitment company was introduced to KSA and initially contacted Keith Steven Managing Director of KSA to discuss the company’s present financial situation. Then, after a subsequent telephone conversation a meeting was requested and held near the company’s premises.
KSA was appointed to assist the company with a Company Voluntary Arrangement (CVA) in June 2009. Turnover for the 2008 trading year was c£1.1m. 
The company was encountering financial difficulties due to:
– The company’s sales fell dramatically; over 8 months the sales fell some 75%. 
– The directors made 20 redundancies to cut costs
– The offices now too big.

• Having employed 25 people the company now employs only 4 and the offices are costing c£5,500 pcm  

– A time to pay deal (TTP) for the recent taxes had been agreed, however cashflow is too tight to meet this
Premises
– The company leased city centre offices which had become too costly to maintain.
– The company relaocated shortly after KSA’s appointment saving c£60K pa

Employees:
– The company employs 4 staff including the directors
– As detailed previously 20 redundancies had been made to reduce costs

Bank & Financial facilities
– The bank provided an overdraft facility of £10K
– The bank were unsecured

Director
– The directors had provided joint and several Personal Guarantees (PGs) to the bank

Unsecured Creditor debt:
– £175K of which HMRC was 80% 

The nominee’s review was held and the CVA and nominee’s report were subsequently lodged at court The CVA proposed 34p in £1 repayment to unsecured creditors over 5 years. However HMRC’s acceptance with modifications stipulated increased contribution which increased this to 50p in £1. The CVA was therefore approved at the creditors meeting in January 2010.