Background
The company operated as a maintenance contractor under various framework agreements for housing associations and local authorities. Due to the failure of a diversification strategy, bad debt of £400,000 was incurred, causing severe cash flow difficulties.
Issue
The company’s funder had become concerned over the viability of the business but considered that it had a strong underlying business, which had the potential to succeed, so we stepped in to help.
Outcome
We proposed a CVA (Company Voluntary Arrangement) to creditors which was overwhelming approved, with the company able to meet all payments. The company has recently been able to propose a modification to the proposal to enable early release and payment to creditors, with significant payment to unsecured creditors of 40p in the pound.
Working in tandem with us, we were able to generate significant work for a local solicitor firm with regards to dealing with the directors’ personal guarantee issues.
We were able to stabilise overall business trading for the company, providing time for the directors to take the company back to its core strengths. This has resulted in the company emerging in a significantly stronger position.
