Mr H – Manchester

The company was incorporated in 2007 and the initial start-up costs were funded by the Director in hope that these will be repaid once the company became successful.

The Company offered Construction Consultancy and drawing measurements to Building Contractors Pre Tender and relied upon the Director’s wealth of knowledge gained from over 23 years’ experience in the industry. The Company’s sole employee was the Director and with limited overheads, was profitable.

The company has traded successfully since its incorporation with the industry remaining buoyant with demand for the services growing. Since 2013 the company has suffered with late payments on many contracts which has affected cash flow. The company did not have a dedicated credit control function and relied on the director collecting on the outstanding invoices as well as acquiring new business. The continued late payments had a dramatic effect on cash flow which in turn resulted in late payments to VAT and corporation tax where fees and penalties were incurred. Due to the creditor pressure the director sought advice from our firm.

An Independent Business Review (IBR) was undertaken and it was identified that there was insufficient new orders to keep the business trading. It was also identified that the company could have been rescued if the director had sought advice earlier.

Whilst there were large book debts outstanding, the company’s liabilities far outweighed its assets and the company was deemed insolvent. Due to the book debts being in the construction industry which is notoriously hard to collect, fees from agents can rise to over 35%. We carefully selected our agents to ensure that the debts were collected in a swift and successful manner. In total, 86 Percent of the book debts were collected and only a fee or 15 percent was deducted meaning a larger return to creditors.

At the point of liquidation, the director was owed money that he had introduced to the company to keep it going during trading. Due to the nature in which we went about running the liquidation, the director will see, along with creditors, a significant amount of the debt being repaid.

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