The director of a is a web design and SEO (search engine optimisation) company based in Surrey contacted KSA Group after reading the website. The company encountered financial difficulties due to previous bad debts and a very competitive marketplace. The business had a small annual turnover of £280k.
Prior to our appointment, the director had cut costs 2 months via 4 redundancies replacing sales team with 1 and instigating a new affordable commission structure. This meant commission bill reduced from c. £5k pcm to only £350 pcm. All other workforce retained.
But, the director also believed the company was insolvent due to cash flow issues. This was mainly due to clients paying on results resulting in that large amounts of work being carried out before any payment was forthcoming.
• Bank had no exposure No loan or overdraft facilities. No security
• No contingent liability
• No assets based lending
• Landlord premises occupied on an ad hoc basis
• Unsecured Creditor debt was £193K of which HMRC 96%
• Bad HMRC compliance history
• Debt dated back 18 months
• HMRC threatened to levy distraint over assets.
On December the 11th, KSA set about working on a rescue. This was done by proposing a CVA and by liaising with HMRC to stop the any distraint action.
• HMRC approved CVA with standard modifications on 27th April 2012
• CVA approved by the creditors at the creditors meeting on 15th May 2012
• CVA approved by majority creditor; HMRC, prior to Creditors meeting with 96% approval by value other creditors were carried by the decision.Dividend 46p in £1
• Post CVA approval - 2 additional previously un-notified creditors admitted by supervisor.