Business in trouble.

[smd]

We are a Limited Company with 2 families running the Business since 1975.

The company consists of a Trading Company and a Holding Company. The Holding Company is 4 shops in which we trade.

We came to an agreement to demerge. The other family take two shops and we have the other. This will enable us to Trade in 2 shops and reduce our outgoings as the Trade company has a cash flow problem at the moment.

We saw our Bank 3 weeks ago and produced a Business Plan and asked for a Loan for us to progress the demerger, pay Suppliers Debts, Inland Revenue arrears and building work needed for us to move into our Freehold. He was very positive and told us the bank want to help us providing we get a payment plan with the Inland Revenue. The bank produced a letter to the Inland Revenue to confirm they would help us. The inland revenue agreed a payment plan.

How long does it take to get a Business Loan in place. We spoke to the Bank Liason officer 2 weeks ago and he said they would give us an overdraft within a few days to help us while the loan is processed. On that I was able to keep the suppliers at bay and told them honestly that we were getting finances with a week. The following week, we heard nothing and then found out the Liason Officer was on holiday for a week. He came back Monday so we said to him what is happening. He said, would be a couple of days. Still nothing today. We contacted him and he said he is awaiting the Loan department for the answer if it is yes or no. We were under the impression that we were getting this loan indefinitely. If they say no, surely we can appeal.

Has anybody else had this experience? We are now in a situation that we cant cover the wages for our staff. The suppliers are threatening court action. We have not paid ourselves for 12 weeks now so our overdraft is to its limit and we have no money at all for our own personal bills. We are at our wits end. Our money is in our Directors Loan. If we dont get this loan now, we cannot fulfil the Inland Revenue and will have no alternative but to close the doors.

Any help would be much appreciated.

 

[Chrismckay]

smd

It is difficult to give specific advice without all the facts but here are some general pointers.

The bank is likely to require additional security either from the Limited Company or by way of personal guarantees. Have these been asked for? If not it is unlikely the bank will lend further.

It sounds like the Company may be insolvent. This being the case you should take specialist insolvency advice to make sure that you are not doing anything which could give rise to personal liabilities for the directors.

 

[smd]

yes, Chris, we are borrowing 60k against the Holding Company worth £500,000. We are trading at a loss at the moment but thats because we owe our Suppliers who have put us on stop till we pay so the bank are aware of that. We are also need some renovation doing in our Holding company with the builder and that costs 10k so if we can get that done and move into the premises, we will be back in profit. Vicious circle really. They have also got our Business Plan with the new ventures in place that they liked. We spoke to our Liason Officer today and he said it is being looked at now and they said cash flow will be tight for the 1st 14 months as we got to pay the Inland revenue arears but our Liason Officer explained after that, things will be much easier. We are also selling our house and will have a substantial amount of cash of which we will be injecting into the business. So I feel, we have covered everything. We had to turn down £30,000 worth of business last month because we cant get the goods. Fingers crossed, we get it. I will let you know the outcome.

Thanks for your input.
Sharon

 

[Alan R Price]

We are trading at a loss at the moment but thats because we owe our Suppliers who have put us on stop till we pay so the bank are aware of that.

Sharon

It sounds as though you have a cash-flow problem, rather than that you are trading at a loss. Cash flow and profitability are not the same thing - for example if I sell £10,000 worth of goods for £50,000 I have made a profit of £40,000 but I may have a cash flow problem because I am unable to pay my supplier until my customer pays me.

There are alternatives to traditional bank finance which are available at relatively short notice and might be more appropriate for you than an overdraft or bank loan - factoring or outside investment, for example.

As a last resort you might need to consider a company voluntary arrangement although at first glance this might be a sledgehammer to crack a nut. It may be possible to negotiate extended credit terms or a debt holiday with your main suppliers/creditors while your refinancing arrangements are being put in place.

The matter is clearly not straightforward and the amounts involved are quite significant so more detailed information than you can put onto a forum like this is required in order for you to obtain proper advice. Feel free to PM me your telephone number if you would like to talk informally about your options.

 

[smd]

thanks Alan. I will bear that in mind. We should be hearing from the Bank today, if no then we may go into CVA and will be seeing our Accountants about that.

Your advice is much appreciated.

Kind regards,
Sharon

 

[Alan R Price]

thanks Alan. I will bear that in mind. We should be hearing from the Bank today, if no then we may go into CVA and will be seeing our Accountants about that.

Your advice is much appreciated.

Kind regards,
Sharon

If you need a second opinion about a CVA give me a shout.

 

[Chrismckay]

Good luck with the Bank today. I hope it works out well. If not remember that there are always options (some easier to choose than others!)

The earlier that you consider them the more options there are and the more likely that you can control the situtation.

If you want an outline of the options feel free to contact me direct.

 

[manaboutmoney]

Oh Mate, I feel for you. I run a recruitment agency and had to place it into liquidation 2 years ago......corporation tax got the better of me. Its ok just make sure that your directors loan account is paid up otherwise the insolvency practitioner will make you pay it back

 

[smd]

Thank you to all of you for your support and advice, it does help.

The facts are on the 22nd March, the bank got back to us and said, no, they felt that we would struggle for the next 12 months.

With that, I closed the company there and then and sent the staff home sadly.

We have had no choice but to put the company into liquadation. A very hard decision as its a family business that was first opened in 1938.

It is so frustrating as we had 5 banks that wanted to do business with us and still does but we are coming out of this Market, too many PLC companies taking over the industry.

I feel so terrible that I promised my Suppliers (who I have a very good relationship with) that they would be paid on a Payment Plan and that in 12 months we would of seen the wood for the trees. Sadly, time was against us.

Anyway, after speaking to the liquidator today, it took a lot of pressure off us and I am now looking to the future.

After we liquidate the Property Company we get a substantial amount to start a new business which there is certainly a niche in the Market so still very positive.

What upset me today was, one of the Creditors we owe £6,000, sent their driver round for the cheque, when he gave us the paperwork and we read it. It instructed him to collect cheque and if we wernt there to come to our personal home address and get it from us. That shocked me as we are not personally liable for this as it is a limited company. Is that legal for them to come to our home address. I find that threatening as I have a family at home. As for our Loan account, the company owe us. We did not take wages for 12 weeks so we could still pay the staff and we put debt on our personal credit cards of £25,000 of which we have to pay.

Does it pay to be honest, I wonder.

Your opinion does matter.

Kind regards,
Sharon

 

[BCR Insolvency]

I guess the CVA wasn't viable then?
That's a shame, I'm a huge advocate of CVA's and have been for as long as I can remember, but they have never been terribly popular until a few national retailers started doing them.
Good luck with the liquidation, although I'm puzzled by one comment of yours about getting a substantial amount to start a new business - is this a solvent liquidation or are you owed a very large sum with a potential dividend to creditors? If that's the case, I would encourage you to use a smaller firm with lower fee levels to maximise your dividend. Some large, national firms charge twice or more what smaller regional firms charge.

Regards

Kevin Lucas

 

[Alan R Price]

Thank you to all of you for your support and advice, it does help.

The facts are on the 22nd March, the bank got back to us and said, no, they felt that we would struggle for the next 12 months.

With that, I closed the company there and then and sent the staff home sadly.

We have had no choice but to put the company into liquadation. A very hard decision as its a family business that was first opened in 1938.

It is so frustrating as we had 5 banks that wanted to do business with us and still does but we are coming out of this Market, too many PLC companies taking over the industry.

I feel so terrible that I promised my Suppliers (who I have a very good relationship with) that they would be paid on a Payment Plan and that in 12 months we would of seen the wood for the trees. Sadly, time was against us.

Anyway, after speaking to the liquidator today, it took a lot of pressure off us and I am now looking to the future.

After we liquidate the Property Company we get a substantial amount to start a new business which there is certainly a niche in the Market so still very positive.

What upset me today was, one of the Creditors we owe £6,000, sent their driver round for the cheque, when he gave us the paperwork and we read it. It instructed him to collect cheque and if we wernt there to come to our personal home address and get it from us. That shocked me as we are not personally liable for this as it is a limited company. Is that legal for them to come to our home address. I find that threatening as I have a family at home. As for our Loan account, the company owe us. We did not take wages for 12 weeks so we could still pay the staff and we put debt on our personal credit cards of £25,000 of which we have to pay.

Does it pay to be honest, I wonder.

Your opinion does matter.

Kind regards,
Sharon

Sharon

Creditors are not entitled to pursue you personally for company debts unless they have your personal guarantee. Sending people to your home address when they know the company is insolvent and going into liquidation could be considered harassment. I recommend you send a polite but firm letter to the creditor pointing out that that the company is going into liquidation, is not in a position to pay and that you are not personally liable; and asking them to refrain from any further contact with you.

If they will not then stop, you would be entitled to report the matter to the police, particularly if you feel personally threatened.

 

[logoonlinepros]

Oh my Gosh! I think your in big trouble. Its very difficult to give you any sold idea or any perfect solution of your flagrant problem. In my opinion you should change your business activities.

 

[smd]

Hi Alan,

I said that to my husband that this comes under the Harassment Act. The Company already know that we are not liable and that it is a limited Company. I am going to write to them personally and tell them that their claim is now with the liquidator and that if they harass me any further, I will not hesitate to press charges against them. It will be all sorted within a week. I will be glad to see the back of it all now. As for the properties, that is a solvent company we are liquidating and I have a potential buyer already so when that is completed we will be moving to new premises and going into a new business altogether, so I am positive and looking forward to the future.

Thanks Alan

Kind regards,
Sharon

 

[smd]

Oh my Gosh! I think your in big trouble. Its very difficult to give you any sold idea or any perfect solution of your flagrant problem. In my opinion you should change your business activities.

Its ok thanks, I know what I am doing, been in the business for many years but thanks for your opinion.

 

[Alan R Price]

Oh my Gosh! I think your in big trouble. Its very difficult to give you any sold idea or any perfect solution of your flagrant problem. In my opinion you should change your business activities.

This sort of comment is not helpful. If you can't say something constructive, why say anything?

 

[Christine Hough]

This sort of comment is not helpful. If you can't say something constructive, why say anything?

I guess logoonlinepros don't understand what is going on and couldn't come up a sane comment.

 

[smd]

I guess the CVA wasn't viable then?
That's a shame, I'm a huge advocate of CVA's and have been for as long as I can remember, but they have never been terribly popular until a few national retailers started doing them.
Good luck with the liquidation, although I'm puzzled by one comment of yours about getting a substantial amount to start a new business - is this a solvent liquidation or are you owed a very large sum with a potential dividend to creditors? If that's the case, I would encourage you to use a smaller firm with lower fee levels to maximise your dividend. Some large, national firms charge twice or more what smaller regional firms charge.

Regards

Kevin Lucas

The Property business we are selling is a solvent liquidation. The trading company is an insolvent liquidation. We are using a small firm to liquidate both.

 

[JEREMY HAWKE]

Unless your really into knocking people around .(You might want a bit of a dust up after all thats happened) I would report any harasment to the police.
Rememeber they made the choice to offer your company credit. They were daft enough to offer the company credit when the bank said no way !.

 

[jules12345]

If the bank is going to take security anyway - why not just re-mortgage your property, and use that.

I know using your home is risky in business, but I would presume its faster and may give you the time necessary to stop the nut being cracked so to speak. Easier due to a good mortgage payment record in the first instance. Obviously you have to be sure that your business won't go down the pan, it does put you in the hands of others, in regards to not frequenting your business to make you leave the field of play however, and once and for all, but this might be deemed conspiracy.

Your selling your house, but are your selling your house to upgrade to a bigger house and higher mortgage ? This seems to me to be trying to hole up a leaking dam with blotting paper. Stick to what you know, and seeing as though you have been in your house for some time and I presume like living there, then why not stay and re-mortgage, release assets and pay creditors, and stave off the fray until you can afford an upgrade.

Regards
Jules

 

[Spongebob]

I'm a bit late to this thread Sharon, but why are you liquidating the solvent property company? As landlord to the trading company you could have seized all its assets in lieu of unpaid rent, closed it down, and started up again under a new company banner at virtually no cost.

It's a bit more complicated than I make it sound, but I'm surprised your accountant didn't put together a scheme along these lines. It could have saved you tens of thousands of pounds...

On second thoughts, I'm not surprised. Most accountants are bloody useless in such circumstances!

 

[smd]

I'm a bit late to this thread Sharon, but why are you liquidating the solvent property company? As landlord to the trading company you could have seized all its assets in lieu of unpaid rent, closed it down, and started up again under a new company banner at virtually no cost.

It's a bit more complicated than I make it sound, but I'm surprised your accountant didn't put together a scheme along these lines. It could have saved you tens of thousands of pounds...

On second thoughts, I'm not surprised. Most accountants are bloody useless in such circumstances!

Right we are liquidating the solvent company because there are two families involved in the business and we wish to demerge. Its good for us as we wish to move our new business and free from other shareholders. We will be cash rich new business and will be going into a specialist area so completely different to what we were doing. Its a really good move for us. We could of kept our side of the property but to be honest the area isnt like is use to be and the parking is bad for our customers so for us new start. Hope that explains it.