Production Company Given Poor Advice From Accountant

The Challenge

A media production company with a turnover of approximately £180K faced a critical financial situation. Its difficulties were rooted in historic debt to HMRC and a failed “time to pay” arrangement. The director also blamed poor advice from the company’s accountant. The company was technically insolvent due to a lack of cash flow, even with a pipeline of work, because very few of these prospects were converting into paying contracts. The director’s personal assets were also at risk due to a personal guarantee provided to the bank.

The Solution

The director initially engaged RMT KSA to assist with a Company Voluntary Arrangement (CVA) in October 2015. However, during the process, it became clear that the business was not viable for a CVA. The core issue wasn’t just the debt; it was the fundamental inability to convert potential work into revenue. After discussions, the director made the difficult decision to pivot from a rescue strategy to a formal insolvency process to prevent the situation from worsening.

The Results

The director, recognising that a turnaround was not possible, decided to appoint KSA to place the company into a Creditors Voluntary Liquidation (CVL). This choice allowed the director to stop trading in a responsible manner and ensured that the company’s affairs were wound up in an orderly fashion, preventing further financial losses to creditors.