Administration
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Saving the company
Martin and his family controlled and operated a motor dealership. Cars and sales were his forte with significant volumes being shifted. He relied upon a newly employed accountant for recording the accounting transactions and producing management accounts. After a while, the accountant went on what appeared to be permanent sick leave following which it became clear that there had been an undisclosed break down in the accounting systems and the information being presented to Martin was inaccurate. It also became clear that the business had been sustaining losses represented by outstanding creditors, with the VAT-man at the head of the queue with a winding up petition, which is when we were introduced. It was clear that some form of protection was required against HM Customs and a number of other pressing creditors whilst the financial position was clarified. What was not clear was how long this process would take and therefore it was difficult to negotiate informal payment schedules. We therefore decided upon administration. Following our appointment, it became apparent that the financial position was worse than indicated. However, a larger group was attracted by Martin's sales prowess, if not his management skills and after some basic due diligence, acquired the company's shares for par from the shareholders.
"Administration is highly effective in stopping creditors in their tracks so you have the time to assess the current financial state and options.
If it is possible to save the company, administrations keep this option open
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