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Thursday, 31 October 2013

Business Rescue Case Study Using a CVA to beat Winding up Petition

Our latest business rescue case study is a small victory for a company that was facing an aggressive action by a creditor -  a winding up petition.

A creditor had chased money for some weeks when it then changed tack. it employed the services of a company that advertises itself as a debt and insolvency expert on the web. The tactic used was to demand money in 24 hours or they would issue a winding up petition in the High Court. 

Two days later a petition was served and costs were already at £2,300.

Our first view was that this looked like an "abuse of court process". The courts do not like very aggressive actions, where the debtor can't pay straight away but can pay over time.

We utilised the services of Lexlaw to get the  petition withdrawn, but payments were made to the creditor over time. Meanwhile we assessed the company's debt issues and because the HMRC liabilities were too high to service, we  decided with the board of directors that a CVA was the right solution.

This was put together for this services firm in a couple of weeks.  The same so called "advisor" then issued another winding up petition on behalf of another creditor, before the creditors meeting to decide whether to accept the CVA or not.  Once again, we made sure the matter was dealt with quickly and professionally by Lexlaw.

The CVA was approved by the majority of creditors, the petition was withdrawn and no costs were paid to the advisor or his client.

Moral of the story? If you have a letter threatening very aggressive action on behalf of a creditor get fast expert advice from KSA Group or Lexlaw.

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