While attending one of our networking events
While attending one of our networking events which are held throughout the UK, I happened to meet an individual who was promoting his business, we got chatting and it became apparent that the business was struggling for a number of reasons, I offered to arrange a free no obligation meeting and would bring along Tim Corfield a Licensed Insolvency Practitioner to see if we could help in anyway.
The meeting was arranged within the week, and the story that unfolded was………………..
A company that had traded for well over 50 years, started by the Grandfather then passed to his son who in turn passed it to the Grandson. The company generated income for the first two generations of the family.
The product that they were supplying was no longer in demand, as the market place has changed although the grandson had tried a number of ways to diversify none of the efforts proved to be successful.
The grandson realised that they could no longer carry on trading as the orders has died off and they still had debts to be paid. Initially the grandson thought about re-mortgaging his property to put some money into the company as order may pick up in several months. After our meeting with the grandson, it transpires that the orders had ceased some 6 months ago and the work in progress was left over from previous orders.
Creditors were several months in arrears, PAYE and Tax were due, and the overdraft with the bank was at its limit £ 20,000 which had a personal guarantee.
After looking at the personal guarantee it transpired it was still in his father’s name, he had retired from the business some ten years previously and did not have the funds available to discharge it immediately. The father was unaware of this until we informed his son who in turn would inform him.
After taking advice it was clear to the grandson that the company did not require further funds it was at the end of its life, and any monies he had from re-mortgaging would help toward his new business going forward. Secondly we had highlighted to the grandson his father’s guarantee the grandson could relay this message to his father at an appropriate time to minimise any distress this could cause his father, he then had time to think about how to handle this, prior to the bank contacting him for repayment.
The company was placed into Creditors Voluntary Liquidation with our assistance. The grandson did not need to re-mortgage due to being employed by a competitor(who had diversified some 10 years earlier) in a managerial role with a salary which enabled him to make an offer to the bank, which was accepted, to pay back his father’s guarantee over an agreed period of time.