The Hampshire-based company had traded for over forty years and was a significant employer in the Alton area. Turnover last year was close to £9m, but the manufacturer began experiencing problems in 2015 as the impact of storms to the supply of a critical product from a sole supplier in 2013 snowballed.

Dickinson, CBW partner and joint liquidator, said: ‘The slow progression of projects together with increasingly long contractor payment terms and reduced levels of stock, put a squeeze on cash flow despite a strong order book.

 ‘On 2 July, the company embarked upon a promising CVA which would very likely have ensured a successful turnaround.  However, by 28 July the company was no longer able to meet its obligations and ceased trading. 

‘The combination of a delay to the petition being dismissed by the Court on 16 July, and restrictions imposed by Natwest on banking facilities during this period  which prevented payments to suppliers or wages, resulted in a fatal loss of confidence.’ 

 Dickinson reported that orders and potential sales valued at £1.8m, which had been included in the CVA cashflow forecasts, had been lost.  Prior to CVA approval, Dorwin’s tender receipts were around £2.8n.  Since the CVA started, these receipts have totaled £96,000. The company’s value to creditors is put at £2,937,474.

‘When companies face pressure from creditors, in particular where it gets to the point of a winding-up petition, they must act quickly. As can be seen the repercussions can be fatal.  In this case, despite a workable and practical CVA, the damage caused by the freezing of the bank account and a period without trading was irrecoverable. 

'If the company had acted earlier, there is every likelihood that it could still be trading,’ Dickinson said.

Sign up to our newsletter

If you would like to receive regular news alerts about breaking news and developments in tax, accounting and audit, sign up to receive our free newsletter here