At BRI Business Recovery and Insolvency, we were introduced by an accountant regarding their client, a UK supplier of Colombian coffee.
The Coffee distributor had been trading since 2010 and only had one supplier of stock; they had been the sole supplier since incorporation.
Coffee Company Faces Difficulty
The Company traded successfully for 14 years and had a good relationship with their long-standing supplier. However, the Covid-19 outbreak resulted in prolonged trading issues. This led to the Coffee Company owing their supplier some £40,000, and the Company was insolvent on both a balance sheet basis and a cash flow basis.
Despite the healthy relationship, the supplier was unwilling to continue to provide the Coffee Company with new stock, as they were concerned about the level of credit they had already provided. The supplier was also threatening to issue a winding-up petition against the Coffee Company for the unpaid stock. This placed pressure on the Coffee Company and the director, with seemingly nowhere to turn other than to cease trading and allow the supplier to incur the costs of petitioning to wind up the Company.
Insolvency Advice from BRI
After liaising with BRI, the director of the Coffee Company understood that they could not repay any monies to the supplier and were unable to source any other revenue streams. As a result of the stress the director had been under, there was also no willingness to carry on with the Company, and ultimately, they wanted to call it a day.
Given the relationship with the supplier, it was suggested to the director of the Coffee Company that he notify the supplier that he has sought insolvency advice and the Company is unable to pay the £40,000. As a result of this, any winding-up petition would need to come at the supplier’s cost, and they will, from the outside looking in, not receive any funds from a liquidation. It seemed a lose-lose situation for the supplier and possibly throwing good money after bad.
The director explained to the supplier the feedback obtained from BRI, and the supplier agreed to withdraw from paying for a winding-up petition and, as a gesture of goodwill to the Company and their 14-year relationship, agreed to write off the balance and take no further action.
This meant the Coffee Company had no liabilities and could potentially look to take steps to strike off the Company rather than it resulting in insolvency. The director was extremely pleased with the result BRI helped them achieve and was also happy that the long-standing supplier was not incurring any additional costs to themselves taking legal action against the Coffee Company.
BRI – Going the Extra Mile
This is just one of the many things we do at BRI – going the extra mile. We were not paid any fees for this informal insolvency advice (despite the director’s offering). It seemingly meant that the supplier was not further out of pocket, and the director’s stress levels were reduced.
If you or your company are in a situation and would like to discuss your insolvency or rescuing plans, contact the team at BRI Business Recovery and Insolvency today.