Client / Background:-
Experienced Housing and Property Developer, well educated, excellent understanding of his business, knew the causes of the difficulties but could not see a forward strategy and wanted to steer clear of an Insolvency process at all costs given the impact that would have on the standing and reputation of the business.
Key Issues:-
The core activity of the company is that of builders and contractors, principally undertaking new builds, refurbishments and maintenance. The key distress symptom for this business relates purely to a working capital shortage and a poor trading year and where some losses had been made.
Company bankers placed reductions to the working capital overdraft facilities.It has been difficult for the Directors to establish exactly why this had occurred and despite many protestations they continued to press reductions, stating only that the company no longer met their required lending criteria! This has had a massive impact on the cash flow given that most of the work was on a contract and tranche payment basis.
Consequentially, HM Revenue & Customs began pressing.
Corrective Actions / Recommendations:-
- The insolvent position, restructuring the balance sheet.
- Working Capital facilities – a negotiation with the Company Bankers undertaken to ensure funding is maintained at acceptable levels.
- An informal arrangement negotiated with HM Revenue and Customs for the current debt thus keeping the business away from a formal Insolvency process. And the local papers!
- Developed and implemented business and market planning activities to maximise competitive advantages, re-defining and stating unique selling points.
- Defined a full and comprehensive marketing and PR strategy to help differentiate and seek to add value to the business offering.
Result –Negotiations with the HMRC prevailed and no further legal action has been brought against the company.
END