Case Studies - Corporate solutions

Case Study 1 - Company Voluntary Arrangement (CVA)

Background

A clothing company was suffering significant losses due to market changes to cheap imports. Three important contracts had been lost. As a result of poor cash flow, the level of unpaid creditors increased The business in the meantime had bought in new embroidering machinery. It had also won new, high value contracts as a result of taking on a new business manager.

Unfortunately, due to the loss of its major contract, the business could not maintain payments to it's creditors on time. The business had long term prospects, due to the new contracts in place however needed some form of Creditor Protection in the short term.

Solution

Administration protected the business from on-going creditor pressure whilst the company worked out a schedule of repayments under a Company Voluntary Arrangement. The CVA repaid creditors in full over a 3 year period. This enabled the company to continue trading and keep its employees.

(Please note that Administration may involve procedures other than a CVA)

Case Study 2 - Creditors Voluntary Liquidation (CVL)

Background

A bicycle manufacturer had been trading for 15 years. Trade had suffered as a result of competition from high street shops that had started selling cheap imports. The company had not reacted positively to this new competition. The management was struggling to maintain the business and find new markets.

Solution

The business was unable to continue in the face of the competition. Redundancies followed and the Inland Revenue and Customs and Excise debts became unmanageable. The Directors had personally guaranteed the company's bank lending. With the threat of winding-up petitions against the company, the Directors felt that had to take control of the situation. Creditors Voluntary Liquidation was the only solution as all other possible solutions were not viable. The Directors entered into Individual Voluntary Arrangements to resolve their personal guarantee issues. The Directors started employment with their former main competitor and have now resolved their personal debt issues as well.