Supplier debt

[Jacob albert]

My company is struggling at the moment cash flow wise so we have implemented a period of 2 months of not purchasing and living off the stock we have. Also of not paying suppliers, some have been supportive some not. The ones that have not have got solicitors involved. The money at this time is not there to pay them so I'm not sure what they hope to gain. Would a court ccj ask us to wind company up to pay or would they negotiate a payment plan? We had hoped to stave them off for two months to get cash in bank to continue trading then at that point negotiate payment plans with the suppliers we have outstanding balances with. Any advice is much appreciated. Cheers

 

[Mark T Jones]

Is the business itself actually viable?

you might benefit from a CVA if it is

or from Spongebob if it isn’t


In answer to your question, you have 30 days to pay a CCJ without it remaining on your records

after that, they might agree to a payment plan, or they might go straight to bailiff ms or High Court.

wherever possible, communication is the best plan

 

[DavidWH]

Your suppliers are well within their rights to attempt to recover the debt, afterall your poor cash flow is your problem, and you're using their cash flow to try and get yourself out of it.

Also consider the length of time it will take to issue the court papers, then set a hearing date, all before the judgment is issued.

Although as @MarkTJones says, is the business viable, how certain are you of clearing the existing stock, and paying off the suppliers?

 

[Mr D]

Back when I had a ccj I did try doing some payments to the creditor however 4 months later I had ccj papers and a month later the ccj was issued. The offer I made on the ccj papers was implemented.

Winding up your business is a more costly matter and one that is not guaranteed to get them their money. Also it's further down the line from now.


Has any supplier asked you to return stock?

Your decision to not pay suppliers will have messed up your relationship with them. Will you be able to trade without credit terms? Paying for all stock when ordered rather than a month or 3 later?

It would be worth looking at whether your business is insolvent.

 

[Jacob albert]

The business is viable long term if we can either a. Get through by negotiating with suppliers to pay the amounts over longer periods which I am doing with a decent amount of success. Most are understanding to a point and I don't think the relationships are gone they just might reduce or terms going forward. Or b. We find funding from outside investment to get us through. The situation at the moment is one that were not buying so living off the stock we have so sales are dropping significantly. If we could get 100k in to pay some suppliers off and some for stock we'd be fine as we have literally saved all we can in other areas most notably redundancies. They have been agreed on payment plans aswell so the monies owed out each month will be reduced significantly once redundancy payments are out of the way.

What benifit/disadvantages is there to a formal cva? Isnt agreeing payment plans etc in essence what a cva is? I know if it's done formally is leagally binding etc but apart from that?

 

[Mr D]

The business is viable long term if we can either a. Get through by negotiating with suppliers to pay the amounts over longer periods which I am doing with a decent amount of success. Most are understanding to a point and I don't think the relationships are gone they just might reduce or terms going forward. Or b. We find funding from outside investment to get us through. The situation at the moment is one that were not buying so living off the stock we have so sales are dropping significantly. If we could get 100k in to pay some suppliers off and some for stock we'd be fine as we have literally saved all we can in other areas most notably redundancies. They have been agreed on payment plans aswell so the monies owed out each month will be reduced significantly once redundancy payments are out of the way.

What benifit/disadvantages is there to a formal cva? Isnt agreeing payment plans etc in essence what a cva is? I know if it's done formally is leagally binding etc but apart from that?

It sounds like the business is insolvent and trying to trade, which is risky. Get professional advice.

 

[Jacob albert]

We did have a meeting with a local firm who seemed just keen on suggesting winding up, starting again and buying back the assets at a reduced cost and wiping the debt. All sounds great but not in a position to give pgs to get the money to buy the assets back. Plus I'm certain all the suppliers would not want to give credit if they have got 10p in the pound of what they are owed

 

[KellyBDE]

@Jacob albert are you B2C or B2B? What is the reason behind your cashflow issues? Is this caused because the sales are not coming in? Or are you providing credit terms and your customers not paying you on time?

 

[Jacob albert]

Hi Kelly, thanks for posting. We sell yo other business and the public. The cash flow issues are mainly due to giving credit but obviously now we are not buying much sales have fallen. The custom is there just not the cash to fund the purchase. On top of that the former owners have a veto on finance. I think as the land is valuable the are happy putting us out of business and cashing in on the land.

 

[Mr D]

Hi Kelly, thanks for posting. We sell yo other business and the public. The cash flow issues are mainly due to giving credit but obviously now we are not buying much sales have fallen. The custom is there just not the cash to fund the purchase. On top of that the former owners have a veto on finance. I think as the land is valuable the are happy putting us out of business and cashing in on the land.

Former owners having a veto on finance?

You purchased the business and your solicitor was happy to allow that?

 

[Jacob albert]

Well to be honest we were two members of staff eager to do a deal and nieve. The oldco paid for our solicitor which was the same as theirs

 

[bodgitt&scarperLTD]

Bloody hell, I've heard it all now.

 

[Ian J]

The cash flow issues are mainly due to giving credit but obviously now we are not buying much sales have fallen. The custom is there just not the cash to fund the purchase. On top of that the former owners have a veto on finance. I think as the land is valuable the are happy putting us out of business and cashing in on the land.

According to your last thread there is the not insignificant sum of £600,000 that you owe the previous owners for purchasing the company from them.

Depending on exactly what you do there is the possibility of purchase order finance coupled with factoring that may help you out but it depends on the kind of veto that the previous owners have amongst other things

 

[Lisa Thomas]

The Company is insolvent and the Directors should be taking insolvency advice.