Castle Inns (Stirling) Limited (SC083946): administration
- Status
- Administration ended
- Administration began
- 2011-07-08
- Administrators
- John Charles Reid, Dominic Lee Zoong Wong
- Administrators' firm
- Deloitte
- Formerly
- Shilgad Limited
- Incorporated
- 1983-07-14
- Location
- Glasgow
- Industry
- 5540
Why it went into administration
- HMRC / tax arrears
- Cash flow / liquidity pressure
- Funding withdrawn / unable to refinance
- Sustained trading losses
From the administrators' statement
In March 2010, Deloitte were instructed by the Bank to carry out an Independent Business Review of the business following the Directors’ request for additional funding. At this stage, the Company was experiencing significant cash flow difficulties and had suffered difficult trading conditions primarily due to the downturn in the economy. During mid 2010, the Bank provided further additional funding by way of a capital moratorium and a restructuring of debt. Despite this, the Company continued to experience significant cashflow difficulties during the latter part of 2010 and requested further funding from the Bank. Whilst the Company produced trading cashflow at EBITDA, it was highly leveraged and as a consequence, was unable to service its debt structure. Additional funding was not provided and accordingly, the Company's Directors sought to refinance the business with an alternative funder. However, they were unsuccessful in obtaining suitable funding.
As a result of the lack of available working capital, the Company had accrued significant creditors’ arrears, particularly PAYE and NIC arrears with HMRC, and had subsequently been required to negotiate a Time To Pay (“TTP”) arrangement to reduce these liabilities. During the early part of 2011, the Company had agreed to subsequent TTP arrangements which they were unable to meet. This resulted in HMRC raising winding up proceedings in the Court of Session, Edinburgh on 28 June 2011. At this stage, the Directors were in discussions with a firm of business turnaround specialists to consider the options available for the Company to enter into Company Voluntary Arrangement ("CVA"). Unfortunately, the Directors were unable to provide either HMRC or the Bank with a detailed CVA proposal within the required timescale.
In view of the significant cashflow funding required by the Company and the threat of a potential winding up order by HMRC, in order to preserve value in the business an Administration appointment was made under paragraph 14 of Schedule B1 of the Act.
Administrators' statement of proposals (2011-09-09) · Companies House register