LipSync Post has contacted its creditors in a bid to renegotiate its debt through a company voluntary arrangement (CVA).
The post-production firm is the latest to find itself in financial trouble and its main creditor is HM Revenue & Customs, which is owed some £700,000 ($1.06m).
This is understood to represent around half of the company’s outstanding debt.
LipSync managing director Peter Hampden said the Wardour Street facility had faced a “perfect storm” of payments coming in late and banks growing increasingly nervous about the TV industry.
“We’ve had a great three years, but the past six months has been tough,” Hampden told Broadcast (sister publication to Screen).
He said a “small” round of redundancies had been made six months ago, but LipSync hoped to avoid any further job losses.
“We’re reducing our costs; there will be selected pay cuts for some staff and some people will occasionally work from home, but we’re already a fairly lean company without any excessive overheads,” he added.
Earlier this week, business adviser Menzies sent LipSync’s creditors a statement of affairs and the CVA proposal.
The agreement, which needs to be approved by creditors who are owed at least 75% of the debt, will allow the company to continue trading while protecting it from action to recover the debts until the agreement ends.
If the CVA is not approved, LipSync could face voluntary liquidation.
The plan will be discussed at a meeting on April 3 and Hampden said he was “reasonably confident” it would be approved.
“We’ll rely on the support of some of our creditors and friends in the business, and I hope we get a bit of slack from people,” Hampden continued.
“We felt [the CVA] was the best solution for our staff and clients. We’ll fight through and we’re not giving up and doing a pre-pack administration deal.
“This is a temporary blip and we have a very busy six months ahead of us.”
LipSync Films and LipSync Productions are unaffected by the action.