Handling a delicate Liquidation

I was recently consulted by a director of a catering company which provided catering for high quality functions.  The business had been operating since 1981 and over the years had established an excellent reputation in the catering market.

In 2000, the company was awarded the sole catering rights to HMS Warrior, having previously been one of its preferred caterers. In 2007, it won the catering contract to do all match corporate catering for Portsmouth Football Club.

The company had been very successful and profitable and its turnover reached £1.3m at its peak. However in 2010, Portsmouth Football Club was placed into administration owing the company £128k.  This had a significant impact on the company’s finances and cash flow.  At that time the director sought advice from Portland and we suggested that he approach the company’s creditors and agree an informal payment plan which he did and all of the creditors accepted this.

Since the administration of Portsmouth Football Club, the company had experienced cash flow difficulties from time to time which the director had attempted to overcome by injecting personal funds into the company. Cost savings, including staff redundancies were made as well as staff not being replaced when they left.  The director was also successful in negotiation a reduced rent with the company’s landlord.

caterers liquidation

Attempts were made to increase sales by improving customer service, including creating a tasting room at the company’s premises for potential customers to taste food prior to agreeing their menus.  The company also employed a marketing agency to assist in generating new leads and increasing sales.

Unfortunately, during the last couple of years of trading, increased competition from other local catering companies resulted in a reduction in the company’s turnover.  This put additional strain on cash flow which culminated in the company accruing VAT and PAYE arrears.

Despite the director’s attempts to turn the company around, in September 2015, he sought advice from us. As a consequence of those discussions, the director reluctantly concluded that the company was no longer viable and would have to be placed into creditors’ voluntary liquidation.

At this stage, the director was faced with a dilemma regarding the upcoming catering functions as the company had taken deposits from customers. The director wanted to fulfil the functions as he did not want to disappoint the customers but the company did not have sufficient funds to meet all of the expenditure requirements to complete the functions. As the majority of the functions were due to take place on board HMS Warrior, we arranged a meeting with their representatives to explain the position. The captain of HMS Warrior was fully appreciative of the company’s situation and was extremely grateful that we had spoken to him as he was very keen to assist the company and its customers and also to keep the excellent reputation of HMS Warrior intact. Through careful planning we were able to ensure that all immediate functions went ahead without any incidents and without the clients knowing of the company’s financial difficulties. HMS Warrior was able to secure the services of an alternative catering company to fulfil its future functions.

The director and the captain of HMS Warrior were very complimentary of my handling of the situation in difficult circumstances which resulted in all of the functions taking place without any inconvenience to the customers.

At Portland, we always find practical solutions to problems. To find out more about the services that we provide, please get in contact with us today.


Sandie Williams
Client Director at Portland