Posts Categorized : Winding up peticion

Scottish CVA Oil and Gas Sector Services company £3m sales Defeating a Winding up Petition

This company was a well established business trading for 30 years in this sector. It had a poor year in 2003 followed by an even worse event in 2004; the business lost its biggest customer and incurred a bad debt of £286,000 into the bargain.

Everywhere the MD turned he was told bin the company walk away and start again etc. Mr D. was appalled that 30 years of trading could end up with that result and did not want to let his creditors, the bank or his people down.

Ironically, we were introduced to the company by an insolvency practitioner who thought he was right to carry on. The company was basically well run and had excellent financial reporting (for once).

We believed that an honest approach to creditors would be well received as he was trying to obey the mantra of the law maximise the interests of creditors.

A CVA was proposed but before the creditors received their copy a single creditor (who was also a competitor) took the opportunity to try and knock the company over with a winding up petition.

This was filed in the Sheriffs Court in Edinburgh and notified to KSA on the same day. We immediately took action and appointed a lawyer to represent the company and seek to have the petition struck out.

The sheriff agreed and said it is not equitable to allow a single creditor to make the decision on the companys future, when the law allows for the body of creditors to decide under the company voluntary arrangement process.

The petition was therefore rescinded and the CVA was approved by creditors 2 weeks later. This was probably a first in Scotland and was driven by expert advice from KSA we know our case law!

We assisted the MD to restructure the company and introduced new financial products to assist in its recovery. Royal Bank of Scotland was very supportive of the rescue and the company is repaying its SFLGS loan on time whilst the overdraft has been repaid.

So, the moral of the case study is that a CVA (if there is a reasonable prospect of it being approved) can defeat a winding up petition. Choose your advisors carefully make sure they know how to use the law to protect your company whilst its being restructured.

2007 Update: Now nearly 3 years later the company has nearly doubled in size, a stake was ought by a multinational company and the CVA was paid off by them 3 years early. RBS has had all of its debt repaid and the company is now operating from two sites as its growth is so rapid.

What price the people who told Mr D bin it?

Mr D is happy to speak to any KSA contact seeking to use a CVA especially in Scotland where they are still rarer than hen’s teeth. Call us now if you wish to speak to him – 0800 9700539.

KSA Group persuades HMRC to withdraw winding up petition and accept CVA

KSA Group persuades HMRC to withdraw winding up petition and accept CVA

Case Study Telephone Answering Service

The company successfully operated a telephone answering service since January 1997. Turnover had grown from 39,000 to 2 million per annum and it traded with a profit in all years of trading apart from 2008. It fell into financial difficulties in 2008 due to a combination of unforeseen circumstances, such as losing key members of staff in financial control, experiencing a significant increase in bad debts, and the value of the Sterling falling against the American dollar.

HMRC was owed 700k and had issued a winding up petition, although it had not been advertised. It was at this point they contacted us. Better late than never! We advised that a CVA was a viable option as long as some major changes to the business were made. KSA immediately set about putting the proposal together. We advised the board to do the following and provided support where necessary.

•The redundancy of the sales manager, the entire marketing department and the call centre manager.
•A full appraisal of the entire workforce with a view to keeping those that are committed to the company and its direction.
•The MD taking full day to day control of sales and marketing.
•The appointment of a new Financial Controller.
•The implementation of weekly staff cost reports, daily profitability reports and a freeze on all capital expenditure.
•The cancellation or non-renewal of certain contracts.
•The appointment of two call centre team managers, a lesser paid position reporting directly to the MD and targeted on reducing costs and maximising productivity.
•A major drive to reign in bad debts. ( caused in part due to loss of financial control staff )
•A reduction in the overall companys overheads.
•A targeted sales drive

The CVA highlighted the determination of the board to push through change and proposed to pay unsecured creditors 72p in the pound over 5 years.

Meanwhile, Annette Breakspear, our corporate advisor, set about tackling the problem of the HMRC winding up petition. It was KSAs view that given the company had some 1m of unsecured creditors a CVA was a better outcome than liquidation which would happen if the petition was allowed. As such, Annette, along with the solicitors, sought an adjournment to allow the actual debt to HMRC to be established (HMRCs petition was inaccurate) and give KSA time to prepare the CVA. The court agreed and the date of the hearing was adjourned. In the interim CVA filed and meeting of creditor scheduled. At the new hearing the petition was dismissed,However, in the interim HMRC had sent proxy accepting the proposal of the CVA.

Call KSA on 0800 9700539 and talk to the experts.

We will arrange a free meeting at either our or your offices to discuss ALL options, including the CVA options described above