Essex Building Contractor Goes into Liquidation
The sole director and shareholder of a building company based in Essex contacted AABRS to assist him with the company’s financial situation.
The company traded as a building contractor. The director had developed a close working relationship with an unconnected company and had been given the opportunity to supply labour exclusively to them and formed the company as a vehicle through which to trade.
The company was financed by a small overdraft facility from the bank.
The company traded moderately successful, achieving sales in the region of £300,000 and a net profit of approximately £19,000 in its first period of trading to 31 March 2013. The company owned little by way of chattel assets.
The company’s market was predominantly the supply of labour for refurbishing and re-fitting branches of large supermarket multiples and with growing confidence in the economy throughout 2013, the level of work increased rapidly and at its peak the company employed up to 40 sub-contractors.
The company experienced payment issues from the main contractor and in the effort to maintain a trusted workforce, the company covered various costs, which within weeks began to challenge the Company’s cash flow. The main contractor owed the company a debt of approximately £135,000. Clearly this was a large amount of cash flow and with the main contractor withholding payment, the company could not survive.
Debts began to accrue and payments were not met by the main contractor. This left the company falling behind with payments to key suppliers and with the increasing pressure from HM Revenue & Customs the director was left with no alternative other than to withdraw his men from the site and cease trading. The company ended with owing over £122,000 to creditors.
Having sought the advice of AABRS instructions were given to convene a meeting of creditors and place the company in liquidation.