Company Number: 13549869

Analysis Date: 2025-07-20 13:58 UTC

1. Risk Rating: HIGH
   Chestnut 21 Ltd exhibits a high risk profile primarily due to persistent net liabilities and negative shareholders' funds over the past two financial years, indicating solvency challenges. The company's current liabilities exceed current assets, resulting in negative working capital which raises liquidity concerns.

2. Key Concerns:

• Solvency Risk: The company reported net liabilities of £11,992 as of 31 August 2023, worsening from £6,793 the prior year, with shareholders' funds also negative. This indicates that total liabilities surpass total assets, a clear solvency red flag.
• Liquidity Concerns: Current liabilities (£1.31m) slightly exceed current assets (£1.30m), producing a negative net current asset position (-£11,992). Cash on hand is minimal (£2,634) relative to short-term obligations, suggesting tight cash flow and potential difficulties meeting immediate liabilities.
• Creditors and Debt Structure: A significant portion of current liabilities (£661,744) is bank loans and overdrafts, with an additional large increase in other creditors (£652,154 vs. £42,451 prior year). The rapid growth in creditors within one year may indicate payment delays or reliance on supplier credit, increasing operational risk.

3. Positive Indicators:

• Ongoing Director Support: The directors acknowledge financial support from shareholders and directors, and the company continues to meet liabilities as they fall due, supporting the going concern assumption despite net liabilities.
• Industry Focus on Real Estate: The company operates in SIC 68100 and 68209 (own real estate buying/selling and letting), potentially providing tangible assets backing, although these are not detailed in fixed assets on the balance sheet.
• No Overdue Confirmation Statement: The company is up to date with statutory filing of confirmation statements, indicating compliance with regulatory requirements at present.

4. Due Diligence Notes:

• Examine Underlying Asset Quality: Clarify composition and valuation of stocks/work in progress (£1.3m), which dominate current assets and likely represent property projects or developments. Confirm realizable value and liquidity of these assets.
• Review Debt Terms and Charges: Investigate details of bank loans, overdrafts, and the fixed/floating charge held by CPS Property Management Limited, including covenants and repayment schedules.
• Assess Cash Flow Forecasts and Director Support: Obtain detailed cash flow forecasts to understand timing of liabilities and expected cash inflows. Confirm extent and conditions of financial support from directors/shareholders.
• Understand Increase in Other Creditors: Identify nature of large increase in other creditors and whether these represent trade payables, accruals, or related party balances.
• Director Stability and Governance: Note recent director resignations and appointments; assess impact on company governance and operational stability.