V1 Championship Liquidation Case Study

Company Description

Business descriptionMotorsport Simulation Company
Employees2 directors
Business premisesPrivately owned by the director

Company Assets

VAT Refund £6,659

Company Liabilities

Trade creditors£42,027.34
Directors Loan£61,655.53

 

The Background

A Northants based business traded as a motorsport simulation company that provided young drivers a platform to get into the industry. Initially on start-up sales increased steadily in the first few months. After six months of trading the company entered negotiations with various motorsport celebrities to assist in promoting it to its target market.

Even with celebrity endorsement, sales did not meet expectations and the directors felt that the website needed an overhaul into a more sales focused site. The company employed to make the changes did not follow the director’s brief which resulted in a poor site that confused customers, and sales over the critical Christmas period suffered.

The disastrous Christmas trading resulted in the directors making one last attempt to save the company by attending an Auto Sport show to attract new business. The level of sales required to give the company a chance of survival could not be secured and revenue barely covered the high costs of paying for the stand and promotional materials.

The Solution

The director sought professional help from Wilson Field, and after reviewing the company’s financial position, the directors concluded that it could no longer continue to trade and we were instructed to place the company into Creditor’s Voluntary Liquidation (CVL). The decision to enter a CVL allowed the situation to be dealt with professionally and quickly ultimately protecting the directors from accusations of trading insolvently.

  • £42,027.34 of unsecured debts written off including the directors loan.
  • On initial instruction, creditors were informed the company had instructed insolvency practitioner to place the company into a CVL. Creditor pressure stopped meaning creditor phone calls and letters were redirected. Pressure was removed from the director allowing him to consider his future.
  • Following a director investigation into his conduct whilst running the company, the liquidator determined the director had not incurred personal liability.

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