The director of a recruitment company contacted Sarah Massey of KSA to discuss the company’s present financial situation. Then, after a subsequent telephone conversation with KSA regional manager, Gary Weber, a meeting was requested and held at the company’s premises.
KSA was appointed to assist the company with a Company Voluntary Arrangement (CVA) in February 2016. Turnover for the 2015 trading year was c£820K.
The company was encountering financial difficulties due to:
- The financial pressures imposed by its primary clients, resulting in reduced margins.
- Historic HMRC debts and struggling to catch up on current HMRC liabilities.
- Failing unviable TTP (Time To Pay) scheme with HMRC.
- The company occupies a leased serviced suite of offices
- The company employs 34 staff including the director
- It was not necessary to make any redundancies
Bank & Financial facilities
- The bank provided a large overdraft facility
- There was a secured Invoice finance facility which was secured via a fixed & floating charge
- There were no finance or lease agreements.
- The director had provided Personal Guarantees (PGs) to a the bank.
- There was a director loan account i.e. the company owed the director money, however, this may not be repaid as it may create a preference so the director agreed to waive his claim to those monies.
Unsecured Creditor debt:
- c£220 of which HMRC was 100%
Cost & overhead reduction
- The invoice finance facility has been cancelled
- All overheads have been reduced and are now under control.
- The director is exploring the possibilities of supplying new sectors both public and private and providing accredited work related training
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 accepted by the body of creditors at the creditors meeting and the company is now in a CVA.