Haulage Company enters Administration & saves 29 jobs
The Problem Presented
A haulage company who were experiencing a £500,000 loss over the past 2 years approached FA Simms & Partners for help. There were two Companies owned by common Directors and Shareholders and they explained that the main reason behind the deficiencies came from a loss making contract within the smaller of the two Companies. They had also received threats of legal action from some of their creditors in that Company.
The director’s and their accountant wanted help with the lack of cash flow within both businesses. Due to the loss making contract, the larger of the two Companies was lending money to the other Company and therefore affecting its own cash flow at the same time. As there was a lack of cash flow, the business rescue options of a Company Voluntary Arrangement or a trading Administration did not look hopeful. The directors felt strongly that there was a business to save in the second Company and if current contracts were reviewed and overheads reduced then the business would be successful. It was therefore discussed that the sale of their second company would be logical to ensure that the first business was no longer affected and so it was decided that the second company would file for an Administration Order and seek a buyer promptly.
How we Helped
The Administration process granted the company a Moratorium which prevented creditors from taking legal action against the company. During this time we employed a third party agent who marketed the second company in order to find a purchaser for the business and preserve asset value. We also assisted the company in seeking the correct legal advice in relation to helping their employees and also helped secure funding from one of the company’s larger contractors to allow for the continuation of trade during the marketing period. This all took place within one month.
The Company Now
The first company remains trading profitably and the second Company is in Administration. The sale of the business has enabled it to repay the bank in full and their factoring company. The purchasing party continues to trade the second business successfully. If your clients can relate to the topic of a drop in sales affecting their business, then contact us today to discuss your situation with one of our Licensed Insolvency Practitioners.