The company was a language school with lower fees than its rivals. In its first five years of trading, the business expanded, with large numbers of students, nine teachers employed, and three floors of a building occupied.
However, after a flourishing start, the business was impacted by new government legislation, which concerned students coming to the UK and tighter immigration rules, which reduced numbers, and the business started to lose money.
The Slide Towards Insolvency
The new laws restricted the amount of people who could enter the UK on student visas and also put restrictions on any part-time work during their stay in the country. Many of the students need to work to fund their course and accommodation and when they were not able to do this, they stopped enrolling at the school. In particular, there was a vast reduction in the number of students from China, with the annual intake dropping from 60 to 5.
The law also insisted on a minimum level of English before entering the UK and this again caused problems as the school was particularly favoured by Chinese and Latin American students who tended to be weaker in their grasp of the language.
This tighter regime, combined with the introduction of Tier 4 student visas, had a serious impact. Further, the school also had to be inspected by the Independent Schools Inspectorate, which placed particular pressures on smaller schools.
Meanwhile, one of the school’s most popular courses in basic IT, known as the European Computer Driving Licence, was classified as unsuitable for students who wanted a visa, and this led to even fewer students joining.
If these problems were not enough, the company was then told with little notice that it needed to vacate its premises as the building was to be sold. Space nearly was found but the building was vastly inferior, with a shabby interior, creaking floorboards, storage heaters that had no temperature controls and a lift that often broke down, with students sometimes being trapped inside it.
The Choice to Voluntarily Liquidate
The outside was also unappealing, but the directors could not improve it because this was forbidden by the landlord.
The company had signed up to the new premises in a rush as it had few other options, and inconveniently, needed to sign up for a 14 year lease.
Problems were now hitting the business thick and fast. As a result of British Council inspections, directors were then told they needed to recruit staff on higher salaries. This was too much of a cost burden, but if rejected, it would mean the school would lose British Council accreditation, which would again put students off enrolling.
By now, the end was inevitable and the school was insolvent. Company Debt was contacted for guidance and the company was placed into Creditors’ Voluntary Liquidation.
