The company was a well-established Removal Company that had found itself with significant debts caused by customers not paying invoices when due.
HMRC had sent in its own Bailiffs and was threatening to seize the company goods in lieu of taxes due. The directors had 18 employees and had signed personal guarantees for the vans being used so the liquidation would not have gotten rid of the personal guarantee and would in fact have crystallised the debts due.
The initial liability had more than doubled and was now around £289,000 and the VAT and PAYE were due at the end of the quarter. The directors had legal threats from over seven different creditors, including the local Council, who were the landlords.
OVERALL DEBTS TO THE COMPANY: £289,000 – COMPANY TURNOVER: £656,000 – EMPLOYEES: 18
The Solution
We sat down with the directors and asked them what they wanted to do and what was important to them. Having discovered what was essential to the directors, we agreed on a plan of action which included a communication strategy for all creditors, and we took the hassle away within days. Having taken away the creditor pressure, we then worked closely with the directors for 6 weeks to assess the way forward and decided that Creditor Voluntary Liquidation was the best route forward to protect the director’s and creditors’ interests.
We started up a new company under a similar name which is very tricky, as you will see if you check section 216 of the Insolvency Act 1986. We transferred the vehicles across to the new company removing the threat of the personal guarantees. The new company commenced to trade, and the old company was closed, ring-fencing the debts and leaving the new company to trade debt free, keeping all but two staff employed.
A Creditor Voluntary Liquidation and ‘Phoenix’ company solved all the directors’ problems and I am pleased to say they are still doing very well.
