The administrator for a Somerset haulage firm is trying to rescue the business through a company voluntary arrangement (CVA) after a review of its financial position showed that it was still solvent.
Insolvency practitioners at Leonard Curtis said S C Lyons Haulage had “strong outgoing cumulative net cash flow projections” and was solvent on a balance sheet basis and so a CVA could be the best way to rescue the transport company.
The haulier, which operated HGVs out of two bases in Axbridge, Somerset, called in administrators last month after pressure was placed on it by HM Revenue & Customs for VAT and PAYE liabilities.
S C Lyons Haulage, an independent family business, had been trading since 2014 but it began to accrue “a significant amount of borrowing” with its bank during 2016, Leonard Curtis explained to creditors in a report.
It then suffered difficulties due to the Covid-19 pandemic and the cost of living crisis and its liabilities increased significantly as a result.
The report said: “In this period, the company faced ongoing cashflow issues due to a protracted issue in collecting debts as they fell due.
“The failure of the company to service its ongoing VAT and PAYE liabilities resulted in HM Revenue & Customs petitioning for the winding up of the company.”
Leonard Curtis said S C Lyons’ finances suggested it could be rescued; in the year ending 28 February it reported a turnover of £593,000 and a pre-tax profit of £68,000.
The administrator was unable to respond as we went to press, but its report said that it was pursuing a CVA to rescue the firm as a going concern.
However, if this is not achieved, Leonard Curtis said it would run a marketing campaign in relation to its business and assets, which would achieve higher realisations than liquidating the company.
It added that staff claims should be paid in full, there should be enough funds to enable unpaid VAT and PAYE to be settled and there should also be sufficient funds to allow a dividend to be paid to unsecured creditors.