Travel Agent And Tour Operator
A long established travel agent operating in a niche market with a turnover of £3.4m, suffered internal conflict between Shareholders and Directors which impacted on the direction of the Company. As conflicts developed and with other external difficulties, business declined resulting in cash flow difficulties.
After failed attempts to secure further investment to alleviate the Company’s cash flow problems, the Directors sought consultation regarding the solvency of the Company.
A full review and analysis of the Company was undertaken in conjunction with meeting the Company’s accountants and Directors and thereafter the following steps were taken:-
- Helped the management to prepare prudent cash flow forecasts, to establish profitability of the business and rescue of the Company.
- Established contact and continued liaison with industry regulators such as CAA, ATOL, and IATA.
- Sought the sale of a subsidiary company registered in Scotland and its eventual voluntary winding-up.
- Assisted relevant regulators in dealing with passengers who had already travelled and were due to travel and managed the Company’s bonding requirements.
- Identified significant book debts and liaised with a large number of foreign debtors.
- Managed the redundancy of staff and employment related issues.
- Obtained agreement from creditors to the Administrator’s proposals.
- Prompt and effective cooperation with industry regulators has limited exposure of Directors and the company in respect of bonding issues.
- Passengers were made aware of travel restrictions and provided details regarding rights to compensation.
- Book debts in the region of £169,000 have been recovered, the majority of which are from non- UK companies and current realisations are in excess of £220,000.
- Preferential creditors will be paid in full and a dividend to unsecured creditors will be made.
CONSTRUCTION AND CIVIL ENGINEERING
This relatively new family run business sought to overcome the difficulties that new start-up Companies face, and achieved a turnover of £2.9m with a small profit. However, the Company lost its driving force when the managing director died prematurely and inexperienced family members took over.
The Company faced major problems on various contracts regarding both workmanship and materials, resulting in substantial losses and bad debt following unsuccessful legal action being taken to obtain recovery.
The following steps were taken:-
- Monitoring of continued trading to allow completion of current work, based on health and safety regulation, insurance, site security and determination of contracts under the 1998 Edition of Agreement for Minor Building Works.
- Review of Company’s financial position, to ensure sustainable trading.
- Supervision of workforce and mediation of incentives to ensure high quality of workmanship and continued workforce commitment.
- Novation of contracts.
- Recovery of retention monies and negotiation with clients.
- Continuation of litigation in respect of the recovery of a bad debt.
- Agreement reached with creditors on the Administrator’s proposals.
- As a result of the adjustment, work in progress was successfully completed and funds received in to the Administration.
- The Administrator was also able to negotiate the novation of the Company’s largest contract providing further funds.
- The Company’s assets were sold and achieved the full amount estimated to be realised.
- A settlement in respect of litigation is currently ongoing. Following investigations, additional sums have been recovered in respect of the Directors Loan Account.
- It is anticipated that secured and preferential creditors will be paid in full and a substantial dividend paid to unsecured creditors.