By Tim Corfield.
We were recently contacted by Steve who ran three clubs in the West Midland area. Two of those clubs were running at a loss but the other was running at a healthy profit.
Unfortunately, Steve had not taken advice from his accountant when he bought the clubs – this situation would have been avoided by having each of the clubs in separate limited companies. This may have been slightly more expensive and more difficult to administer but would have meant that each of the clubs were ‘stand alone’ businesses and not having the finances of the lossmaking clubs eating up all of the profits of the company.
We reviewed the finances of each of the clubs carefully and the ongoing cashflow. The total liabilities of the company were around £150,000. Bailiffs were threatening and time was running out. It was clear Steve could not trade through this situation. Steve initially thought a Company Voluntary Arrangement (CVA) would be right solution. The problem with the CVA was that two of the clubs were still losing money, there were long term leases and there was no realistic likelihood that this position would change.
The debt advice solution for these lossmaking clubs.
Our advice was to liquidate the company. A new company was formed by Steve to purchase the lease and goodwill of the company. We liaised with Steve’s solicitors to make sure this happened within a few days and continuity of the club was maintained. The leases on the lossmaking clubs were disclaimed by the liquidator and trading from these stopped immediately.
The new company is now trading successfully, and Steve is sleeping again at night! Steve’s testimonial said about Griffin & King “Very helpful from beginning to end. Would highly recommend. Thank you.” Take a look at some of our other testimonials.
If you have any clients or contacts struggling with lossmaking clubs, or have financial difficulties with their business please ask them to get in touch with us at Griffin & King Insolvency Practitioners on 01922 722205. Tim Corfield, Mark Shaw, Janet Peacock or anyone of the team would be pleased to help!