The Situation
A West Midlands-based steel fabrication company employing 25 people faced collapse in early 2024.
The company had operated for over a decade, working on large infrastructure and commercial development projects.
But several unpaid invoices from a major client left the business cashflow-starved.
Costs of raw materials had increased significantly, and the company had fallen behind on supplier payments, staff wages, and VAT.
At the time of first contact, the company owed over £300,000 to creditors:
- £120,000 in trade supplier invoices
- £100,000 in VAT and PAYE
- £80,000 in secured finance against equipment and fleet
The directors had explored a business loan but were declined due to deteriorating financials.
With redundancy looming and contracts still in progress, they called Business Helpline for urgent support.
The Director’s Concerns
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“Can we keep the business going at all?”
- “Will we lose all of our staff?”
- “Is there any chance of saving contracts or selling the company?”
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“What are our duties if we’re already insolvent?”
The Solution: Pre-Pack Administration
Our specialist advisor identified that the company, despite being insolvent, still had a viable core business, active contracts, skilled staff, and existing demand.
We introduced the directors to a licensed insolvency practitioner who proposed a pre-pack administration.
This allowed the business to:
- Enter administration to stop legal action and creditor pressure
- Transfer assets and contracts to a newly formed company under a new name
- Retain 18 of the 25 jobs by rehiring under the new entity
- Provide a better return to creditors than liquidation
Due diligence was conducted to ensure compliance and transparency.
Asset valuation was carried out independently and funds from the newly formed company were used to pay toward the administrator’s costs and creditor
The Outcome
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Creditors were informed and accepted the administrator’s proposals
- 18 jobs were saved and the business continued trading under a new name
- The directors avoided personal liability and disqualification
- Core contracts were honoured, and clients retained confidence
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Secured creditors were repaid through the asset sale
Key Takeaways
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Administration can offer a lifeline for otherwise viable businesses
- Jobs and contracts can be saved if action is taken early
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Pre-pack sales must be handled properly to meet legal and ethical standards
”"It wasn’t just about saving the business, it was about saving livelihoods. The advice we received gave us a second chance we didn’t think we had."
Managing DirectorSteel Fabrication Company
