The directors of a small manufacturing company contacted Debtfocus in early 2010 after experiencing cash flow problems and unable to maintain payments to their creditors. In total the company owed £270,000. Bailiffs were at the door, HMR&C were threatening to issue winding up proceedings and the 20 employees were getting nervous and looking for new jobs.

After a thorough review of the situation, the decision was made to immediately put the company into Administration with a view to protecting the company from action against creditors.

Once the pressure was off, the directors and Debtfocus worked together in continuing to run the company without the pressure of historic debts and looked at the options going forward.

It was decided that although the company could not afford to pay the full £270,000 of debt within a reasonable period of time, the company could afford £1,000 per month comfortably after paying all bills, all employees and directors and also making adequate provision for corporation tax going forward.

The directors also understand that the costs of Administration for Debtfocus are met from company assets available to creditors and not them direct.

A meeting of creditors was held, where creditors agreed to allow the company to continue to trade, pay contributions of £1,000 per month for 60 months with the balance written off. As such, the Administration Order was discharged and the directors continued to run the company as before with a monthly amount to pay and legal protection from creditors.

{Note that the CVA process can be set up on itself without the need to first enter Administration}.