Alex had run his building contractors with his daughter for 10 years. They had established a strong flow of work from local authorities which had grown massively in the past 3 years. In order to ensure they could complete the contracts they had taken off additional debt and staff. Suddenly the contracts were stopped, Alex was left with a lot of debt, more staff than he could finance and a huge headache.
Even though the credit crunch had started in earnest, we really though we were safe. We had rolling contracts with several local authorities to install security systems across the south of Wales, we had the finance in place to make sure the contracts could be satisfied.
Loss of cash flow
One by one, the local authorities started terminating the work. They all said the central government had cut their budgets, so they had no choice. It was truly devastating. We had worked so hard to get to this stage and now the rug was pulled from under our feet.
Over the next 7 days 40% of our work had gone, just like that.
We knew it was serious and we had to get a professional in, a friend suggested we talk to Zennet Solutions, they had dealt with them in the past and they had been really helpful.
Zennet Solutions helped me relax
It surprised me by how relaxed I felt after that phone call, it just felt like a weight of my shoulders. It turned out we didn’t need to Liquidate and try and start from scratch, instead we would put the company into Administration to ensure that we could start up again from a stronger position.
There were a couple of other issues as well, we had personal guarantees in place for the money we had borrowed, and a lot of vans, most of which were not needed.
Dealing with company assets in Liquidation
The vans were the easy part, we chose which ones we wanted, and bought those from the company (over time of course), the rest went on to be sold by Zennet’s valuers.
Liquidation and personal guarantees
The Personal Guarantees were a different matter. I think it must have taken the best of a week to negotiate with the bank to move the debt over to the new company, this allowed us to have the finance we needed to move forward.
Once everything was in place, we then proceeded to liquidate the old company. The Administration did make things a lot easier, and tidier.
We now have a company that is growing again, albeit smaller than we were before. Both we and the staff are a lot more confident moving forward. I’m a lot more careful about accepting work, at least I’ve learnt that.