We recently acted for Hey heating and plumbing business who had established themselves over the last 11 years, trading successfully with 4 Housing Associations and a customer base of over 4,000 properties which they managed.
As a result staff changes in the last 3 years together with sickness, maternity and regular absences from two of its staff members the Company started to experience cash flow difficulties.
The first meeting with the Director of the Company confirmed that there was over £230,000 pounds of creditors which had accumulated. Of this figure £8,000 pounds was due to HMRC. The Company was served with a Winding up Petition which would have resulted in the Company being placed into compulsory liquidation.
The Director was well known in the locality and had a great reputation within the Housing Associations where the Company provided services. The Director had previously injected £40,000 pounds of personal funds into the Company to assist the cash flow difficulties. With the Company’s trading history together with a substantially large database of customers the director was unwilling to give up .
NBR Solution
Time was of the essence and so contact was made with HMRC as a matter of urgency, to request a possible arrangement to defer the Winding up Petition for a period of two weeks.
We reviewed the Company’s accounts for the last 2 years and advised that the best solution was to set up a new Company and purchase the assets of the existing Company. We contacted a local agent who assisted in the valuation of these assets, which included tools of trade, motor vehicles and fixtures and fittings. This enabled the new Company to continue to trade with the existing customers with little or no disruption.
We ensured that HMRC were kept up to date and having taken the situation out of the hands of the director meant that he was able to concentrate more on building the future of the new Company.
We also spoke to most of the creditors of the Company advising them off the way in which the new Company would be trading. Due to the continued relationship the director had built, most of the creditors were willing to work with the director in the new business.
The staff were transferred over to the new business which meant that they would not lose their statutory entitlements under the employment protection act legislation.
The director was advised to put in place systems which allowed him to monitor the company’s cash flow on a regular basis. We arranged a time to pay arrangement with HMRC in relation to the outstanding debt and agreed a figure which was more affordable to the Company than the amount outstanding in the sum of £8,000 pounds.
The other creditors have agreed to write off their debts with a view to having a relationship with the new Company and the directors are going forward.
Next Step
If you want to find out anything further about this topic then please feel free to call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com.
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.
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