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