Carlisle-based dealer G&M Supplies is on the verge of liquidation, after a Company Voluntary Agreement (CVA) to allow it to continue to trade has seemingly failed to save the business.
The CVA proposal was originally accepted by the distributor’s creditors on 8 January and incorporated the appointment of Hugh Jesseman of Antony Batty & Company as supervisor.
However, in Jessemen’s report to creditors on the arrangement’s progress, recently posted on the Companies House website, he reported that the measures have not worked.
He wrote: “The arrangement was approved on the basis that the company would pay monthly contributions. The CVA was put together on the expectation that the company would obtain a new funding line in the form of an invoice factoring facility to help manage the company’s cash flow issues together with measures the company had already taken to reduce its operational expenses.
“It was anticipated the company could put its financial difficulties and creditor pressures behind it and go from strength to strength.”
But he subsequently detailed: “Initially the company had a few obstacles to overcome when applying for the new funding line, but this was being carefully monitored. Then in March 2020 came the global Covid-19 pandemic.
“Despite indications from the company directors that the business would be able to adapt to trading conditions brought about by the pandemic, the open and regular communication we had with the directors started to become sporadic, and calls and email correspondence eventually ceased altogether.
“Initially, the supervisor exercised his discretion in accordance with HM Revenue and Customs guidance and permitted an extended payment holiday. However, following extensive efforts to communicate with the directors it became apparent that they would not be able to meet their obligations under the CVA and they were no longer communicating with the supervisor despite countless opportunities to do so.”
G&M’s current directors are listed as MD Gavin McKew and Amanda McKew.
Jesseman further reported that he issued a notice of breach to the company on 3 August 2020 to remedy the arrears situation and re-establish communication, but none was forthcoming.
He detailed: “Due to the fact that no contributions had been paid into the CVA, there were no funds for the supervisor to initiate winding-up proceedings. However, two of the company’s major creditors have agreed to fund the company’s winding up petition with our appointment as liquidator so the company can be closed down in an orderly fashion and to ensure it cannot continue to trade in the future.
“As a result, a firm of solicitors has been instructed to initiate these legal proceedings.”
G&M missed all eight scheduled CVA contributions, and as a result has accrued arrears of £17,500, after taking into account the 3-month payment holiday permitted by the Covid pandemic. Jesseman also underlined: “Due to the lack of communication with the company directors, we cannot be certain that the company has not received any windfalls or government-backed loans.”
The distributor’s current debts total £288,602.31. Trade creditors include Classeq, Parry Catering Equipment, Blue Seal and Interlevin Refrigeration.