The company in this example was a 46 year old machinery sub contractors, which had experienced a management buy-out and were in the early stages of a volume manufacturing contract with a large automotive client.

The contract was to be a massive revenue stream for them and so when the need to buy expensive new machinery arose the company purchased it as although it dented their cash flow at the time, they were confident that they would make the money back quickly.. However, as the project progresses the turnover that they initially expected wasn’t reached, and then to add to their problems they began to have machinery problems- meaning some of the work had to be subcontracted, which decreased their profit margin.

These unforeseen glitches lead to serious cash flow problems, and in turn a build up of debt to several secured and unsecured debtors: things seemed bleak for the future of this long running business.

The company sought the help of a debt rescue specialist and decided to apply for a CVA, which was fortunately approved by the creditors. The terms of their particular CVA were that the preferential be paid in full and the unsecured creditors would be paid a dividend of forty seven pence in each pound, and that the contract would be signed over to another company. After this approval the company was able to continue trading and returned to the base of their business, subcontracting for blue chip clients.

The company managed to complete their CVA 6 months in advance and they carried on trading meaning jobs were safe and stakeholders investments protected.

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