Insolvency Case Study – London Printing company
We were consulted by a printing company in the London area, that was experiencing significant cash flow difficulties. The directors had previously spoken with another large firm of London Insolvency Practitioners, who had recommended that the company be placed into Administration. The printing company had been established for over 40 years and the directors really wanted to save the whole business.
We spent considerable time with the directors gaining an understanding of exactly what the issues were that were affecting the company’s cash flow and also to some extent its profitability. This involved carrying out a full review of all operating and production procedures. Once satisfied that we understood all of the issues affecting the company, we produced both a plan to improve production efficiency and also a plan to deal with the current cash flow issues.
It was clear to us from the outset that the company was well established and well respected within its industry and also had a strong and loyal customer base. In order to deal with the historical build-up of debt, the company needed either an injection of new capital or alternatively a moratorium period on payments to suppliers. There were several key suppliers, which without their support the company simply could not operate. Additionally, the company owed significant amounts to HMRC.
We concluded that if we could secure the support of those major suppliers as well as giving assurances to the existing customers, that a Company Voluntary Arrangement was the most suitable process that would not only ensure the continuation of the business but would also return the most to creditors. It would also secure the employment of the workforce.
After many days of discussions with the key suppliers, customers and HMRC, we were satisfied that we had secured sufficient support to instigate the CVA. The initial proposal sought a payment holiday from existing creditors at the date of the CVA for six months with the company making regular monthly contributions after that date.
Spending that little extra time with the directors at the commencement of this assignment to truly understand the key issues and problems facing their business, proved invaluable and lead to a highly satisfactory outcome for all parties.