Thu, 27 Jul 2023 | ADMINISTRATION
London-based Haydon Mechanical & Electrical has filed a notice of intention to appoint administrators. The company entered a Company Voluntary Arrangement (CVA) with its creditors last year as a result of cashflow problems in the wake of the COVID-19 pandemic.
The CVA, which the company entered in August 2022, was designed to distribute £7.2 million to the firm’s creditors at a rate of £200,000 per month, with repayment starting from November 2022 and seeing suppliers receive at least 80p to the £1 in return for their debts.
At the time, the firm had a loan agreement in place with former parent company Mears, which had sold Haydon to its management team in 2013 for £1 million. Mears had agreed to postpone all loan repayments for a period of at least 18 months as the company worked through the CVA.
In Haydon’s most recent accounts at Companies House, covering the period from July 1 2020 to December 31 2021, it reported turnover of close £66.2 million, compared to £58.8 million for the year ending June 30 2020, but fell to a £6.2 million pre-tax loss from a £1 million profit in its previous accounts.
In those accounts, the company noted that, due to the nature of its business, “there can be considerable unpredictable variation in the timing of cash inflows” a situation that had been “compounded by the COVID-19 pandemic, and the ensuing lockdowns and government restrictions which resulted in a slowdown in the industry, delays on contracts, cost increases and the erosion of contract margins”.
The company said that these issues had led to it entering the CVA, but added that projected cash flow information up to November 2025 indicated that the company would return to profitability during 2022 “and will continue to be profitable for the duration of the period considered.”
Despite this optimism, the firm is now poised to fall into administration. In its accounts to the end of 2021, its fixed assets were valued at £93,848 and current assets at close to £16.5 million, while its net liabilities amounted to £1.4 million.
Read about the latest developments as UK company insolvencies continue to increase.
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