The Company commenced in 2010, initially selling gate frames. In 2016, the Company commenced re-selling concrete sleepers utilised in retaining walls. In 2018, the Company established a steel fencing business. Further, in 2020, the Company made the decision to shift from purchasing and re-selling concrete sleepers to manufacturing their own sleepers.
The Company’s financial difficulties stemmed from a significant increase in direct and in-direct costs and an unidentified losses being incurred from the fencing and gate division. The Director’s decision to bring the concrete sleeper manufacturing process in-house, had brought about unexpected costs which the Director did not foresee. The impact of the COVID-19 pandemic also negatively impacted and exacerbated the Company’s financial difficulties which contributed to a deterioration in sales and increased supplier costs which reduced profit margins across its product range, but especially with its fencing and gate division. The culmination of these factors impacted the Company’s cash flow position which made it increasingly difficult for the Company to continue to trade whilst meeting and discharging its accruing liabilities.
On 9 March 2021, Stephen Dixon was appointed Administrator of the Company who continued trading the Company’s business. The Administrator and his staff, obtained the ongoing support of key suppliers, including the landlords, to allow ongoing trading of the business. Whilst trading the business, further analysis of the Company’s business’s divisions identified that the Company’s fencing and gate frame division was generating trading losses and directly impacting the profitable concrete sleeper division. Accordingly, immediate steps were taken to wind down this division to focus on the profitable concrete sleeper division of the business which in itself required restructuring and streamlining. Separately, the Administrator ensured that he had the ongoing support of the Company’s secured creditors, including the major secured creditor, Scottish Pacific who provided debtor factoring facilities to the Company. We also engaged external accountants to prepare budgets and cashflows for the restructured business model.
The Director submitted a proposal for creditors to consider, which detailed that contributions would be made over a forty-two (42) month period and that a Board of Management would be formed to oversee the operations of the Company for the period of the proposed Deed of Company Arrangement (“Deed”). At the meeting of creditors dated 16 June 2021, creditors of the Company resolved to accept the proposed Deed and it was subsequently executed.
Following the execution of the Deed, the Company engaged an external chief financial officer to work alongside the Director to establish greater financial control as well as engaging external consultants who implemented a software program that provided the Company with visibility over its financial performance, financial position and inventory system on a real time basis in the one location. The Board of Management is still meeting every month to discuss the Company’s financial performance and position, and issues identified during the month (if applicable) and providing guidance to the Director. The Company has successfully continued to generate profits and meet its obligations pursuant to the executed Deed at a time when the COVID-19 pandemic was still having an effect on the economy.
By the Director realising that the Company had financial difficulties and making a decision to act promptly by engaging an external party to review the business’ operations and identify the underlying cause of the Company’s financial predicament, the Company was able to be restructured and is now a viable and profitable business which provides great satisfaction and delight to the Hamilton Murphy team.
If you have concerns over your business’ ongoing viability to trade, please contact our office to discuss the options that may be available to you. The earlier you act, the better chance you have of survival.
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