A new lease of life for a brewery


How a new finance facility resolved a brewery’s cash flow problems and provided funding for growth.

Helping clients with their funding arrangements

Oliver is an expert in business finance. He has helped dozens of clients improve their cash flow by putting the right finance package in place.

Oliver Collinge

Director - Leeds

t: 0113 426 7405

e: oliver.collinge@pkfgm.co.uk

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

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Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

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Rescue of a food manufacturer


How we used administration to rescue a food manufacturing business that had fallen into financial difficulties.

The client

Our client produced high quality, rare breed meat for the UK hospitality sector, including a number of Michelin starred restaurants.

Although a well-known and highly respected name in its market, the business had experienced a number of operational and financial difficulties over several years and had accrued creditor arrears which were no longer sustainable.

The problem

Due to several years of gradually worsening financial performance, caused both by changes in its market and problems with its operating model, the company had built up large creditor arrears. The owners of the business were not willing to introduce further funds and management recognised that the company was no longer sustainable without additional capital being introduced and action being taken to address the creditor position.

The company was beginning to experience significant cash flow pressure and several creditors were threatening imminent legal action. The management team approached us for advice on whether the business could be saved.

Dealing with cash flow pressure

If your business is experiencing cash flow pressure, get in touch with us. There are a wide range of options for dealing with cash flow issues.

The sooner you take advice the more options you have and the better the chance of success.

The plan

Because the business needed the introduction of significant capital, as well as a mechanism to deal with its large creditor arrears, a sale of the business via a pre-pack Administration, appeared to be the best option; the other main rescue procedure – a CVA – would only deal with the creditor position and would not solve the need for a capital injection.

A pre-pack involves finding a buyer and agreeing the terms of a sale before the company enters administration. Once a deal has been agreed the company is placed into administration and the sale takes place immediately: the business and assets (including employees) move across to a new limited company owned by the purchaser, whilst the creditors remain with the original company in administration.

Working with management we prepared a long-list of potential purchasers – this was based on management’s market knowledge, our own research and our extensive professional contacts, including a variety of investors who buy and fund financially distressed businesses. A one-page confidential flyer was issued to our target mailing list of several hundred parties. This initial mailing generated significant interest and a full sales pack was provided to all parties who who were willing to sign a confidentiality agreement. A number of parties then visited the business and met with management to assess whether to make an offer.

The result

Within three weeks of our initial meeting with management we had received three credible offers to purchase the business via Administration. Within a further week we had agreed terms with a trade purchaser, the company was placed into administration and the sale of the business completed.

The purchaser was a larger food manufacturing business, which not only had the resources to fund the business but brought access to new routes to market, which were expected to grow sales, and synergies to reduce costs.

The company’s entire workforce (some 25 employees) were transferred to the purchaser, providing full continuity of employment (including their accrued length of service and other entitlements). In addition the proceeds from the sale of the business, together with the collection of the company’s outstanding sales ledger, were sufficient to enable us to make a distribution to creditors.

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

What insolvency option is right for my company?

The range of insolvency options can be overwhelming. We’ll help you understand the options and make the right choice for your business.

Peter Hart

Director - London

t: 0207 5162221

e: peter.hart@pkfgm.co.uk

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

Change in HMRC preferential status

The status of monies owed to HM Revenue & Customs (“HMRC”) in formal insolvencies changes with effect from 1 December 2020.

Changes to the status of monies owed to HM Revenue & Customs in formal insolvencies

In insolvencies, both corporate and personal, from that date HMRC will become a secondary preferential creditor, meaning it will be paid in priority to floating charge creditors, suppliers, pension schemes, customers and before deduction of the prescribed part.

The amounts owed by the insolvent entity in respect of the following taxes will become secondary preferential claims:

  • VAT
  • PAYE deductions
  • Employees’ National Insurance Contributions (but not employers’ NIC)
  • Student loan deductions
  • Construction Industry Scheme deductions

There is no timeline demarcation limiting the value of the preferential claim; if it is owed to HMRC on the date of insolvency and falls into one of the categories above, it will be a preferential claim in the relevant insolvency process.

Stephen Goderski

Director - London

t: 0207 516 2224

e: stephen.goderski@pkfgm.co.uk

Not only therefore will tax payments deferred as a result of the lockdown become preferential, but it is entirely possible that tax payable as a result of an enquiry which has taken, say, five years to conclude will also be treated the same way.

The hierarchy of payments in formal insolvency processes will as a result look like this:

  • Fixed charge holders
  • Preferential creditors (employees for arrears of wages and salary (capped at £800 per employee), employees for holiday pay arrears and contributions to occupational pension schemes (limited to the twelve months leading to the date of insolvency in respect of employers’ contributions and four months for employees’ contributions deducted but not paid over)
  • HMRC secondary preferential claims
  • Floating charge holders
  • Unsecured creditors

It is clear that HMRC are in a unique position, inevitably being an involuntary creditor in virtually all insolvencies, and it is difficult not to feel sympathy for the fact that as businesses are stretched financially, it is not unusual for payments due to HMRC to be given reduced priority. HMRC therefore end up acting as an unofficial and unauthorised overdraft facility and, in that respect, it is probably right that their resulting claim has some element of priority in subsequent insolvency proceedings.

Nonetheless, the introduction of preferential status at this particularly challenging moment in time will undoubtedly have a number of, perhaps unintended, consequences.

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Funders will almost certainly cut facilities as their covenants are breached – and not only will HMRC’s preferential claims rank before their floating charges, there is also the increase in the maximum limit of the prescribed part (rising from £600,000 to £800,000) which will also adversely affect the returnto charge holders. This will reduce funds available to cash-starved  businesses already struggling with the effects of the pandemic.

In addition to existing funders trimming facilities, it will be more difficult to obtain finance from alternative funders as asset cover will be eroded by the change in HMRC’s preferential status. This too will almost certainly drive businesses into insolvency.

Those insolvency processes themselves may be more terminal than would presently be expected. By that we mean that it will be harder to secure approval of Voluntary Arrangements if the return to unsecured creditors is significantly eroded by virtue of HMRC’s preferential status.

Unsecured creditors will not be disposed to agree to an arrangement where they only receive a nominal dividend over a protracted timescale; if that was a significant dividend they would more likely than not support such a proposal, as is presently the case.

It does not seem right that monies owed to HMRC from prior years should be deemed to be preferential immediately that the legislation takes effect. If the Finance Act was modified to state that all tax payable from the financial year commencing on 6 April 2020 was preferential than there would be less scope for complaint. As it stands, HMRC have been given a huge advantage over unsecured creditors at a time when most of those creditors can ill afford the financial loss.

The likely consequences of HMRC’s preferential status will therefore be:

  • Reduced facilities for cash-starved businesses potentially leading to unnecessary insolvencies
  • Less likelihood of obtaining alternative funding from other funders
  • Less likelihood of creditors supporting processes designed to promote survival, such as Voluntary Arrangements, again forcing businesses into more terminal processes
  • Reduced dividends to creditors in all insolvency processes which will probably lead to an increase in the number of overall insolvencies

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To Conclude

There is therefore a very potent argument for the introduction of this legislation to be both deferred until the pandemic has been brought under control and even then to limit the extent of HMRC’s preferential rights.
We are aware that representations have been made and continue to be made to the Treasury and we hope that common sense prevails in the circumstances and that a further breathing space is provided for struggling businesses.

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

Rebuilding with a CVA

How a CVA helped a groundworks business manage the loss of a major contract and survive to tell the tale.

The client

Our client was a £6m turnover groundworks contractor.

A second generation family business, its customer base was mainly made up of local authorities; one large local authority in particular accounted for over a third of its income.

The company had been historically profitable, but shrinking local authority budgets had reduced margins, so that recent trading had been tougher and cash flow was more stretched than it had been historically.

The problem

A change of key personnel in the purchasing department of the company’s main customer meant that in only a few months the amount of work being obtained form that customer shrunk to almost nothing. This quickly affected cash flow and the company’s management became concerned that their cash resources would be exhausted long before they were able to replace the lost income form other sources – a process they expected to take up to two years.

The client approached us for advice on how they could manage their cash flow whilst they rebuilt their sales.

Is a CVA right for your business?

If you think your business could be viable given some breathing space from creditors a CVA is an option you should consider. Contact us for a no-obligation discussion in confidence about your situation and we’ll talk you through your options.

The plan

The business had been profitable for many years and, although it had become too reliant on one customer, there appeared to be a reasonable prospect that the company could recover to a position where it would be cash generative given time. But large creditor arrears were building up along with threats of legal action by creditors.

We worked with the company’s accountants to prepare trading forecasts which suggested that with some cost savings, the company should return to profit and begin to generate surplus cash in 18 to 24 months. This surplus cash would be sufficient to repay creditors 60p in the £ over a five year period. We also calculated that creditors would only receive about 10 to 15p in the £ if the company entered liquidation (the alternative if a CVA wasn’t approved).

Based on these figures we issued a proposal to creditors offering repayment of 60p in the £ over a five year period and showing the likely return in a liquidation scenario.

The result

A CVA needs to be approved by 75% (in value) of creditors. Following some negotiations with creditors, particularly HMRC, we were able to obtain almost unanimous support for the proposals and the CVA was approved.

With the approval of the CVA, the company’s cash flow problems were immediately settled. Management could re-focus on the business – growing the order book and making cost savings.

The Company returned to profit broadly in line with forecast and continues to make the contributions required under the CVA proposal. It is now less than two years form successfully concluding the CVA.

What if a CVA isn't right for my business?

There’s a wide range of solutions to cash flow problems – one size doesn’t fit all. Contact us to discuss your situation and we’ll give you an honest appraisal of your options and how we can help.

The sooner you seek advice, the more options you have and the better the prospect of success.

The benefits of a CVA

Although they don’t work in all scenarios, CVAs can be a win-win for all parties.

Management retains control of the company and can focus on running the business, rather than the day-to-day firefighting which comes with cash flow pressure.

Although the creditors will not usually recover all their monies, the CVA proposal clearly sets out what they will receive if a CVA isn’t approved (usually a liquidation scenario), so they have a clear choice between two alternatives and direct input into the outcome.

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

Government funding for redundancies

How we helped a distribution business to fund the costs of downsizing its workforce and return to profitability.

The client

Our client was a £12m turnover distribution business. It supplied a variety of customers in the construction and engineering sectors, importing its product mainly from China and the Far East.

Although it had been very profitable historically, changes in the markets that it supplied together with more challenging economic conditions generally meant that the Company was now losing money and had to make changes to its business model to ensure its survival.

The problem

A key part of the company’s turnaround plan was the closure of two small depots and a reduction in staff numbers within its head office. In all, around 20 redundancies were necessary. However, as is often the case, because of the length of service of many of these employees the redundancy costs were significant – close to £100,000.

Although these measures were vital to ensure the business’s viability – and to protect the jobs of the remaining 50 employees – the business was at the limit of its bank facilities and did not have the cash flow to meet these redundancy costs.

The client asked for our help in funding these redundancy costs.

If you need to make redundancies to ensure the survival of your company you may be able to access government funding.

Contact us now to discuss whether you are eligible for the scheme and how our experience of the application process can help you access the funding.

The plan

The scenario faced by the client is quite common. Businesses who need to make redundancies to survive are often the ones who can least afford it.

But the government operates a scheme which is designed for precisely this situation. The Financial Assistance Scheme (“FAS”), run by the Redundancy Payments Service (part of DBIS), can significantly reduce the cash flow impact of redundancies, if certain qualifying criteria are met.

Having made numerous successful FAS applications for clients in the past we identified that the client stood a good chance of making a successful application.

The result

The information requirement for the Financial Assistance Scheme is onerous, more so than in an HMRC Time to Pay scenario for example, but we worked with management to collate the information and prepare a FAS application on behalf of the Company, and then dealt with all of the ongoing dialogue and negotiations with the RPS.

The application was approved, with the result that the RPS paid the redundancy costs of £100,000 in full, which the company was then able to repay over an 18 month period.

The affected employees received redundancy their payments within 8 weeks of the initial application and the companies turnaround plan was able to proceed.

Cash flow advice

There’s a wide range of solutions to cash flow problems – one size doesn’t fit all. Contact us to discuss your situation and we’ll give you an honest appraisal of your options and how we can help.

The sooner you seek advice, the more options you have and the better the prospect of success.

Funding Redundancy Costs

The Financial Assistance Scheme can play a key role in turnaround situations. If you need to make redundancies for your business to survive but your cash flow can’t support it, get in touch for a no-obligation discussion to see how we can help.

We’ll talk you through the requirements, and assess your eligibility. Our fees are linked to a successful outcome, which reduces the risk of incurring professional costs for no benefit.

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

HMRC Arrears

Whether it’s VAT, PAYE or NI, when cash is tight, paying employees and suppliers is often prioritised over taxes. But it isn’t a long term solution: HMRC has wide powers to recover money it is owed and, because it doesn’t rely on you for ongoing business like a supplier does, it’s ultimately more likely to take recovery action against you.

Oliver Collinge

Director - Leeds

t: +44(0)1134 267 405

e: oliver.collinge@pkfgm.co.uk

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

Should I continue to trade?

If you’re concerned about your company’s viability, you may need to consider whether continuing to trade is the right thing to do. There are significant potential risks to continuing to trade if the Company’s future is uncertain.

Oliver Collinge

Director Leeds

t: +44(0)1134 267 405

e: oliver.collinge@pkfgm.co.uk

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

Dealing with a Winding Up Petition

Receiving a winding up petition is a very serious matter. If you do not take immediate action to respond it is very likely to be terminal for your business.

James Sleight

Director - Leeds

t: 0113 4267 404

e: james.sleight@pkfgm.co.uk

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

I’ve received a CCJ that I can’t pay

If your company has received a County Court Judgment (CCJ) because you’ve been unable to pay a debt you should act quickly to prevent matters from escalating.

James Sleight

Director - Leeds

t: 0113 4267 404

e: james.sleight@pkfgm.co.uk

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more

My cash flow is under pressure

Cash flow pressure is a common problem. Most businesses suffer from it at some point, including many very profitable businesses.

Stephen Goderski

Director - London

t: 0207 516 2224

e: stephen.goderski@pkfgm.co.uk

News & Insights

Explore our insights for help with managing financial pressures and building resilience in your business.

Read More about Aegis Companie’s Update

Aegis Companie’s Update

Over the last six years Stephen Goderski has been appointed as Administrator and / or Liquidator of a number of […]

Read more

Read More about Cash flow pressures drives over 100% rise in insolvencies

Cash flow pressures drives over 100% rise in insolvencies

Insolvency figures released today for April 2022* by the Government’s Insolvency Service showed corporate insolvencies more than doubled compared to […]

Read more

Read More about Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

Rainbow Saver Anglia Credit Union Limited – In Administration (“RSACU”)

James Sleight and Peter Hart of PKF GM have been appointed as Joint Administrators of Rainbow Saver Anglia Credit Union, […]

Read more