The pizza restaurant had been trading for a few years and the director saw an opportunity to expand into Poole and Christchurch employing a full-time Manager. It was envisaged that the manager would become a director or shareholder in future years.
To increase business the director made the decision to open for longer, however, this impacted on the wage bill and fuel costs with deliveries going further afield. However, the Company was successful and achieved a top placement on Just Eat for Pizza delivery service in the Bournemouth area.
However, the manager left the Company and took the Head Chef with him and opened a Bistro Pizza just 100 yards from the existing business. The manager had also obtained the Company’s database, menus, and supplier list.
The director took informal legal advice with regards to the use of the database, but was advised that the costs to pursue this could be in the region of £20,000. A cost of which neither the Director nor the Company could afford to pay.
At the start the Company had paid H.M. Revenue and Customs (“HMRC”) on a weekly basis by standing order, but at HMRC’s request the Company was asked to revert to quarterly payments, which impacted on the Company’s cash flow.
With direct competition from the Bistro, the Director noted that business went down as essentially the Bistro was targeting the same customers. The Director tried to reduce the minimum order charge, but this impacted on profit margins.
The night time economy had steadily deteriorated in the Bournemouth area. The local Nightclub which was next door to the business closed down, which lost the Company further customers.
The Director reduced staffing levels, stopped day time opening and cut non-essential advertising in order to try and cut costs, but this proved to insufficient.
The Company had arrears of VAT due to “HMRC” and other small trade suppliers and the Director made the decision that the Company should cease to trade and consulted AABRS to place the company into creditors voluntary liquidation.