Creditors Voluntary Liquidation 2
The company had traded successfully as a manufacturer of specialist cleaning chemicals until the EU reclassified as a toxin its key chemical components. This meant that the company’s main product could not be sold in Europe.
In response to this the company invested heavily developing a new product range. Unfortunately developments costs were significantly higher than expected and sales for the new product were lower than expected. This severely affected the company’s cash flow and trading losses were incurred. The directors sought additional funding but with little success and with the company being insolvent, the company ceased trading and they transferred the assets and business to their other. Unfortunately the new company did not pay for the value of the business transferred.
The new company traded for several months before the company’s bank realised what had happened and froze both the new company’s and old company’s bank accounts. Without a bank account and what funds they had frozen, the company was unable to trade and the directors were referred to us for advice.
We negotiated with the bank and agreed with them a way forward which enabled the new company to continue trading whilst we dealt with the affairs of the old company. The old company was placed into liquidation and a figure was agreed with the directors for the value of the business transferred and this was paid by the new company. The bank debt, which the directors had personally guaranteed, was repaid in full from the company’s assets and the new company is successfully trading on. Having followed out advice the directors have been able to retain their business and so save job and they have also avoided their personal guarantees being called in by the bank.