Oil/gas IT prospecting business
Typically the oil and gas industry is fairly successful, but like the resources it collects it can be quite a volatile industry in which to work. When gas and oil prices fell we were contacted by a company that has developed proprietary software systems for the design of gas compressors and modelling gas compression systems.
However, the downturn in the market meant that many oil and gas companies were no longer prospecting or opening new ventures, which effectively closed the market for our client.
The director had borrowed heavily and tried to stick it out, but after two-and-a-half years he was at the end of his cash facilities and lending potential.
During this period he had maintained all of his staff, as he could not afford to make any of them redundant, despite the issues within the business.
A creditor had petitioned for the winding up of the company and also petitioned for the bankruptcy of the director.
These petitions meant the company bank account was frozen and if the petition for the personal bankruptcy was successful the director would be unable to continue as a director of the business without permission of the Court.
How we helped:
When we began our work with the firm it was clear a Company Voluntary Administration (CVA) was required to hold off the legal action from creditors and give the company breathing space.
A rationalised staff redundancy was met by Redundancy Payments Office (RPO), which allowed the director to make the staff changes that were needed.
We also helped them to reduce overheads by moving their company into smaller offices. This required us to negotiate them out of their old lease, which we managed to achieve, and they moved into smaller, cost effective premises.
In addition we prepared a proposal for an Individual Voluntary Arrangement (IVA) for the director which was accepted by the creditors some of them (personal guarantee creditors) and allows the director to continue running the business.
Thankfully for the business oil prices started to rise and so enquiries started to come in again. The company has subsequently received R&D payment from the government, which has helped cover some of the costs of the business.
Thanks to the breathing space offered by the CVA that we arranged the company has continued trading. It is now in profit which enabled it to make returns to creditors.