Successful CVL of M&S Direct Access Limited with a sale of the majority of the business and a dividend to preferential and unsecured creditors.

The challenge

One80 were introduced to the client, a scaffolding company, by the company’s newly appointed accountant. The accountant had identified errors in the predecessor accountant’s work, which resulted in additional costs and liabilities for the company. HMRC had also threatened to petition to wind the company up and despite measures to reduce overheads the director was unable to continue to trade. Liabilities of £240k were identified, with a significant proportion due to HMRC. We promptly stepped in recognising the time sensitivity of the situation following the overhanging threat from HMRC.

The solution

After considerations were made as to the company’s financial position and following discussions with the directors, accountant and One80 experts, it was quickly agreed that the company should be placed into a Creditors Voluntary Liquidation (CVL) in order to secure the best outcome.

With the assistance of the accountant and agents it became apparent that the recovery of the assets would be expensive. This was primarily due to the scaffolding stock being located at numerous sites across the UK. The director believed that the business had potential and expressed an interest in acquiring certain assets from the liquidation. Following the formal CVL and marketing attempts, agents recommended the acceptance of the director’s offer to purchase certain assets.

In addition to the director’s purchase, a sale of certain assets was made to a connected party in accordance with insolvency rule requirements. This strategy enabled the ongoing work in progress to be recovered and extinguished the need to incur the expense of removing the stock in order to store and sell it to third party, which would have significantly reduced any realisable value.