Company A was involved in general construction, interiors and refurbishment on a fairly large scale. It was the main trading company in the group.
Shortly after our engagement, a Winding Up Petition was served in respect of £122k debt by company B. Negotiations took place and company B agreed to include the whole £122k debt in the CVA. They agreed to the proposal after the benefits of a CVA (as opposed to liquidation) were explained to them. Company B had ongoing work at various sites of Company A, therefore if the company was liquidated, then the other work would be lost. KSA felt a CVA was the best way forward.
Negotiations were so successful that, initially, Company B decided to withdraw the WUP. However, by then two other creditors had noted at court that they wished to be substituted as Petitioner if Company B withdrew. The other creditors were hostile.
We then negotiated with them not to withdraw but to agree to an adjourned hearing that Company A was seeking. After further explanation, regarding piggy backing creditors, they agreed to this. A six week adjournment was granted by the court.
Unfortunately, although we were successful on the WUP front, HMRC considered that the directors’ conduct should be investigated. The CVA proposal was therefore rejected at the creditors’ meeting and the company wound up at the adjourned hearing of the WUP.
The consequence of a winding up petition can be very damaging to your business, so act before it gets to this stage!