Case study - 7 September 2013. How we saved this business and avoided personal guarantees on a factoring facility!

Cheswick Capital - Business asset Sale Case Study

Facing a massive blow to her small company, our client found her accountants and legal advisors were unable to suggest any other strategy but close it down and start again. Given she faced personal guarantees to the company’s lenders, she faced losing money personally and possibly even her home. In addition she wasn’t happy with this close down strategy as she felt it would affect the relationships with her clients.

Our client is a small marketing and design company, the business lost a major client after she had worked hard to secure the contracts and spent several years of building up its value to nearly £200,000 annually. With total sales of £320,000 this was a massive and potentially fatal blow to the company to lose 60% of its revenues.

The loss was not foreseen and no plans had been put in place to deal with this loss. On reflection the director stated she knew she should have acted sooner.

So the objectives were; hopefully see the business survive, cut employment costs, re-size the business to a more realistic level and keep a roof over her head personally. Office property was superfluous, as she now wanted to work from home or a shared office nearby. The 4 employees were not needed full time; one was to be retained part time.

What was our solution?

Given that most of the “intellectual property” of the business was really in her head and the business had little value to any other purchaser, we recommended a structured business asset sale.

The 4 employees were made redundant immediately to allow them to claim benefits. Some were very unhappy about this but we helped explain that there was a chance of some recovery of their redundancy and lieu of notice from the Redundancy Payments Office, if and when the company was liquidated. The liquidator was appointed a few weeks later.

The strategy also required the sale of the business’s servers, customer database, work in progress, computers and furniture - the next step was to ensure that this was properly valued and not sold at undervalue. We introduced a Chartered Surveyor to do this work.

Finally, we prepared the contracts for sale and led the deal structure. We negotiated with her new company to purchase the assets for a modest sum, but one that did not trigger concerns on “transactions at an undervalue” (s238 Insolvency Act 1986 requirements).

The customer base, which is now smaller, modest work in progress and physical assets were sold to “newco” and the newco now trades quite well.

“Oldco” then collected in its debtor book, without much difficulty as most was owed by the exiting large customer. This process of collection allowed the factoring company to collect its secured debts in full, thereby reducing the personal risk for the director and ensuring a  good return for this class of creditor.

A modest amount of cash,  from other debtors, was collected, plus the consideration for the assets and this cash is being used to liquidate the old company, properly. Along with full repayment of the factor, unsecured creditors will receive a small dividend, our view was this whole process got a better result for creditors than moving to liquidation.

Finally, Cheswick Capital introduced a new invoice finance company to the newco to compliment her own modest loan to newco thus providing the working capital to trade.

This client approached us through our website www.cheswickcapital.co.uk and we provided a solution within only 24 hours!

020 7416 6677 or m 07903 097052

Call us now if you wish to avoid insolvency, preserve the BUSINESS and solve problems, we have 6 trained experts across the country including Scotland and Northern Ireland.  Advice and meetings are always FREE, written strategy will be provided including costs to be paid.

All options such as liquidation, CVA, Administration and time to pay deals are discussed and considered carefuly during this meeting and in our report.

New: Cheswick Capital Case Study - Web Design Company

Our client approached us looking to solve a huge problem with tax. The company had lost its main customer. Sales fell from £300,000 to under £125,000. Gavin R had laid off the staff and walked away from the informal office lease. It was now being run from his flat in central London.

So far so good, saving costs and cutting overheads was a good plan. He had taken the right steps to turn the company around.

But there is always a "legacy debt" or ball and chain following along when a company sees sales fall fast. Some £40,000 of VAT, corporation tax and PAYE liabilities were simply unsustainable for a company now nearly two thirds smaller than when the debts were incurred. Cashflow was poor, despite factoring in place with a big bank provider.

The (main UK bank)  factor didn't understand why sales had fallen and they REDUCED the factoring facility advance, this hit cashflow again! Really helpful that.

Second main issue was a director's overdrawn current account - he had been drawing cash out monthly to live, this was not going through the PAYE scheme and at the end of each year his accountant would fix this by the voting of a dividend from retained profits. Well that's a good plan (or was before RTI was introduced in 2013) if profits are being made. The company had LOST money for 3 years, so no dividends were payable. This resulted in an overdrawn directors account of £211,000. He had no money to pay this back in say a CVA.

So our advice was sell the assets such as they were, work in progress and equipment to a new company. We arranged for a professional valuation, wrote the contracts for sale, advised him on the process. We also provided legal advice on the insolvency, set out board resolutions and guided the director through this difficult time.

Cheswick also arranged for a new small factoring facility for his new company, with a specialist provider who understood the previous insolvency issues. So newco is trading and being funded by factoring, the newco company is paying for the work in progress - back to oldco - as it completes new work.

Does your company face large tax bills, looming overdrawn directors' current or loan accounts? Do you need to sell or restart the business quickly, but don't want or cannot afford pre-pack administration? Call us now for a fast solution. 020 74166677.

As this case shows, we can help small companies and companies of any size fix their problems...

Our fees for the above rapid professional solution? Under £3,000.

New case Study, Ladies Fashion Shop Business Asset Sale

Our client had a successful ladies fashion retail outlet in Surrey. Then she opened a second unit and it was a flop. Read how we saved the successful company from being brought down by the failing second outlet.

Ladies fashion shop case study

How We Are Rescuing a Wine Bar & Restaurant; how can we help you?

See here for story on our initial turnaround of a wine bar and restaurant

http://www.cheswickcapital.co.uk/case_studies/case_study_4.php

Having said that it is apparent that the business needed a lot more TLC than even we thought after years of too little investment.

Cheswick Inns Limited, our subsidiary (a special purpose vehicle set up for the job) has spent a significant five figure sum on the acquisition, repairs to the kitchen, bar and public areas, toilets and vestibules. Plus new sounds from a Bose based system, new refrigeration and kitchen extractors, floors ceilings and walls redecorated

It is going to be a complete overhaul. Not finished as of 30th January 2013, but have a read and see what we turnaround guys can do for the right opportunity.

Call us on 020 7417 6677 and get some free guidance on how we can TURN YOUR BUSINESS AROUND

Hilco To Grab HMV From Administrators?

Administrators are pleased to have received so many expressions of interest in HMV store chain. It has emerged that Hilco is front runner to acquire the profitable parts of the business.

With suppliers desperate to have a high street presence for their products, it will be interesting to see what construct they come up with, to support the buyer.

140 retailers on the brink; get turnaround help now if you are in retail

Begbies Traynor announced today that they have 140 retailers in the UK on the critical watch list. Well it is 137 now, as 3 have already gone this week.

Today we saw Blockbuster UK fail, up to 4,000 jobs could go.

Yesterday,  it was HMV with thousands of employees at risk. Last week it was Jessops.

If you have a retail business which has bad cashflow, too many outlets, or a poor balance sheet, get TURNAROUND HELP before it becomes administration. You will lose control very quickly when the insolvency practitioners arrive.

Keith Steven has 18 years of turnaround experience and 16 years retail experience. Coupled with knowledge of modern marketing techniques allied to sometimes brutal turnaround action - move quickly  don't wait for events is our rule - he and his team of 6 expert turnaround men,  may be able to help you survive.

Move now, call Keith Steven on 020 7416 6677 or 07903 097052

LIVE Turnaround Case Study

Cheswick Capital Case Study 

Acquisition of Distressed Wine Bar & Restaurant

Please read all about our live case study Foxtons Wine Bar & Restaurant here http://www.cheswickcapital.co.uk/case_studies/case_study_4.php

Acquired in late 2012, we will regularly update readers on the turnaround as it progresses, the highs and the lows, the successes and the ... well not too many failures we hope!

Cheswick and a private investor, teamed up to acquire a loss making business that was in steady decline. Now some 6 weeks later, we can see progress and customer numbers starting to rise.

With no existing web presence, no email, no logo and no marketing (£0 was spent on marketing in the last 18 months) we had to move fast to get marketing the new ownership / offer.

But in under 3 weeks we had designed new branding and logos, introduced Twitter, Facebook, a new web site and of course blogging to get attention. Coupled with new management, chefs and staff we have started to see the business turnaround.

http://www.foxtonswinebar.com/ is a holding site until we get more details and time. But it has generated traffic as has Facebook.

Need a turnaround team in your business? Need a marketing plan to drive sales and margins? Don't know where to start? We do.

Call Keith Steven now on 020 7416 6677, we will be happy to lay out a turnaround strategy, set the wheels in motion for your marketing plan and we will bring in the turnaround experts to fix sales, margins and marketing. This in time will usually deliver a solution. 

Call Cheswick Capital now on 020 7416 6677 or Keith Steven on 07903 097053 for a free consultation.

Successful Christmas for Cheswick Acquisition

Foxtons Wine Bar & Restaurant has enjoyed a successful trading period in its first five weeks since being taken over by Cheswick Inns.

We have welcomed old and new customers over Christmas 2012, many people returning to sample the atmosphere and the good food and wine.

We appointed new general manager Tracey Thompson and she has now rebuilt the staff and delivered a busy bar with friendly people serving our guests. New chef Wendy Robertson, joined Jamie Lee and we have recruited a third chef called Rodrigo DeHaro who hails from Spain.

With Sunday lunches, weekday lunch, afternoon light bites and full dinner service 6 days a week we now have the team to deliver quality food, consistently.

Sales have seen a rise of over 35% and the business generated a good profit in its first period of the turnaround, under our ownership.

We look forward to the complete redecoration and introduction of new quality toilet areas next week. Fxtons will be closed for 21st and 22nd January 13 to get this work done.

So a successful first few weeks, but like any turnaround job, this is a medium term plan to deliver consistent profitability and return on our investment.