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Saving a Business When a Petition Arrives

Company traded as a children’s play centre, Turnover of £400,000, Employed 4 staff, Assets of £15,000

Turnover of
£400,000
Staff Employed
4
Assets Of
£15,000

The Problem

  • Largest creditor was HMRC, owed £73k for unpaid VAT and PAYE
  • Other trade creditors of £15,000
  • Petition to wind up the company issued by HMRC received – hearing due to be heard in 30 days
  • Creditors accrued because the centre was forced to close for 3 months due to a collapsed roof 

Solution

  1. Immediate action was taken to review the sustainability of the Company without the debt – the core business was viable
  2. Contact was made with HMRC to explore options of a payment plan – this failed as HMRC demanded all of the arrears to be paid prior to the hearing date
  3. Parker Andrews were instructed to place the company into Creditors Voluntary Liquidation (“CVL”), allowing the business to be marketed for sale
  4. A sale was agreed with the Liquidator upon appointment – far in excess of the likely break-up value of the assets
  5. All staff were retained and transferred to the purchaser, therefore no redundancies and far lower level of creditors in CVL compared to a compulsory winding-up
  6. Parker Andrews instructed a solicitor to attend the hearing to have the petition dismissed as the company had entered CVL prior to the hearing date – this was granted

Conclusion

  • Company entered CVL rather than Compulsory Liquidation
  • The petition to wind up the company was dismissed
  • Business assets and goodwill purchased at far higher value than likely in a Compulsory Liquidation, resulting in a dividend to unsecured creditors
  • Jobs saved after all members of staff transferred to purchaser of business
  • Creditors were informed and dealt with by Parker Andrews
  • Sufficient funds realised to allow a dividend to unsecured creditors

Ready for Expert Guidance?

Is your business facing similar challenges? Utilise our Free Business Health Check to assess your company’s financial health, or get in touch with our experts to explore bespoke solutions tailored to your needs.

services Creditors Voluntary Liquidation

Understanding the complexities and challenges of Liquidation, Parker Andrews provides comprehensive assistance through the Creditors’ Voluntary Liquidation (CVL) process. A CVL is initiated by a company’s directors to cease trading and liquidate the company, offering an orderly method to close down a company facing insolvency.

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