Rick Parish is the principal of Ellis Atkins Chartered Accountants of Dorking, a practice with three partners and around 20 staff specialising in taxation, consultancy and book-keeping.
Two of Rick’s clients (companies with common directors) were at crisis point following the business acquisition and reduced trade due to the recession. The directors had invested large amounts of personal funds into both companies but they still owed substantial amounts to their creditors – primarily HM Revenue & Customs. HMRC subsequently issued a winding-up petition against one of the companies. Rick Parish explains why he referred his clients to us and what happened next (names and identifying details have been withheld in order to protect his clients’ identities).
I met Tom Ahmad and Paul Bailey when they came to my office and introduced themselves and their company. At the time, I didn’t think any of our clients needed the assistance of Insolvency Practitioners but I kept their details.
I was concerned that my clients were in a very vulnerable position. They had been struggling on and putting their own money into both companies to cover creditors but weren’t really addressing the fundamental problem.
Given the economic outlook, and without a significant amount of external funding, it was unlikely that both companies could generate sufficient funds to trade out of their deficit position quickly enough to satisfy their creditors. At this point, the directors had only very limited personal funds left and it was felt further investment would only delay the inevitable failure of both companies.
“Above all, the clients were highly relieved that BABR had found a way to turn their situation around”
BABR assisted in the voluntary winding-up of both companies, which was driven by the directors and not the Court. They also agreed on a sale-back of both companies’ assets to the existing directors through a new company incorporated for that purpose, which was subject to creditor approval. The directors were able to acquire the assets – and provide working capital for a new debt-free company – for far less than would have been required to make both of the previous companies solvent again.
They felt confident in the abilities of BABR and were pleased that the fundamental issues were being addressed. Above all, they were highly relieved that BABR had found a way to turn their situation around.
Absolutely. I found BABR to be very efficient and they demonstrated great skill at handling extremely sensitive issues. Our clients were never made to feel awkward that they had got into financial difficulties and no-one was demoralized. Instead, the whole process was very positive and the outcome meant that our clients and their creditors could look forward to profits in the future.