Voluntary Arrangements Case Studies



An established portable building manufacturer and crane hire company operating in the prefabricated building industry sought our advice, after losing a substantial contract – this resulted in severe cash flow problems.

The Company had a significant level of borrowing secured against plant and machinery and freehold property.

The Company’s turnover was £3.9m but was trading at a net loss.

Burdened by its borrowing commitments via several banks, leasing and factoring agreements, the position was made worse by ancillary trading arms which operated at a loss.

The Directors wished to continue trading and required assistance to reorganise the Company’s financial position and ensure the survival of the core business.


Following a review of the business and meetings with the Directors, the following steps were taken:-

  • Preparation of cash flow forecasts and business plan to ensure the sustainability of the core business.
  • Closure of unprofitable trading arms, which released assets to provide working capital and a creditor fund.
  • Redundancies of excess staff to meet reduced cash flow projections.
  • Reorganisation of Company finances including use of alternative banking facilities to replace existing factoring arrangements, and sale of surplus assets.
  • Mediation between creditors and the Company to ensure continuation of supply.
  • Stabilisation of major customer relationships.
  • Agreement of CVA proposals by creditors.


The Company is currently trading successfully. Preferential creditors are expected to be paid in full and a significant dividend is anticipated to be paid to unsecured creditors of 50p in the £1.



This engineering and transmission Company operated from four locations in the UK each undertaking different trading objectives.

Annual turnover was circa £2m producing historically, gross profit margins of 25% to 30%.

The Company had internal difficulties arising from a high turnover of staff and I.T problems.

This was made worse by external factors such as the strength of sterling, resulting in export orders being cancelled and a general reduction in spending by the UK market.

This in turn led to losses and the Company facing corporate failure.

The Bank had previously provided financial support and held a debenture to the value of some £250,000. However, it was reluctant to advance additional funds.

The Directors sought consultation in order to rejuvenate the business and avoid Liquidation.


Following meetings with the Company’s Directors, the following steps were taken:-

  • A detailed analysis of the Company’s financial position.
  • Individual analysis of the four trading branches was undertaken to understand their different functions, i.e. laser manufacturing, CNC machine shop, marine engineering, electrical, adhesives and sales.
  • Closure and redundancies of staff at loss making branches to ensure sustainability of profit making branches.
  • Restructuring the remaining workforce to improve productivity.
  • Securing major customers and suppliers.
  • Collection of book debts with the support of the Bank to achieve 100% repayment of secured liability.
  • Reduction of stock levels to increase cash flow.
  • Negotiating the reduction of Directors remuneration.
  • Agreement of CVA proposals by creditors.


The Company successfully completed a CVA and complied with the terms specified in the proposal.

A full return was made to the bank in respect of their debenture debt.

Preferential creditors were paid in full and a dividend was paid to unsecured creditors.

The Bank retained a viable customer, and the Company now enjoys a strong financial position and presence in their market.

A partnership can also use an Administration procedure known as a PVA (Partnership Voluntary Arrangement).



This firm of solicitors had practiced for many years and had two offices.

It faced financial difficulties due to bad debts and changes within the legal aid system for working capital.

The partnership relied on bank finance as fees earned were often subject to Court taxation. This in turn led to payment delays, and affected the firm’s cash flow.

As cash flow difficulties increased, partnership liabilities accrued and additional bank charges were incurred.

Capital was introduced by one of the partners but was insufficient to finance the firm.

The partners wanted to conclude the partnership in the most effective manner.


Following a review and analysis of the partnership, the following steps were taken:-

  • Successful negotiations to reach an agreement allowing the partners to establish new firms or employment.
  • Key staff remained in employment.
  • The Supervisor remained in constant contact with the Law Society and Solicitors Indemnity Fund, so there was no intervention or encumbrance in the day to day operations of the winding up of the partnership.
  • As a result of the PVA, two partners were able to enter into IVAs and avoid bankruptcy, which allowed them to retain their practising certificates.
  • Constant mediation between creditors and the partnership, to ensure smooth conclusion to the partnership and completion of work in progress.


  • The work in progress was completed and uncompleted cases were successfully transferred for agreed consideration.
  • £450,000 was recovered from continued trading and collection of debts.
  • Total realisations exceeded £700,000, allowing preferential creditors to be paid in full and a dividend to be paid to unsecured creditors.