The CVA was accepted at a creditors meeting on Monday (7 February) after a £5.8m bank loan provided to the company’s parent, O’Flaherty Holdings, was called in.

Business recovery firm Geoffrey Martin & Co has been appointed to the business, which owes £4.4m to unsecured creditors, including £1.2m to HMRC.

The digital specialist was acquired by O’Flaherty Holdings (OFH) in 2006 for £11.7m. A bank guarantee provided to OFH was called in on 14 January leaving the firm insolvent and unable to service debts.

According to a proposal presented to creditors, trading at C3 was considered satisfactory from the date of its acquisition until market conditions deteriorated in late 2007.

The company also suffered a bad debt of £155,000 in early 2010 after The Print Factory London (1991) went into administration, which C3 claimed placed "severe constraints on working capital and cashflow".

As a result, the company shed four of its 10 UK branches in Manchester, Newcastle, Glasgow and Formby. In addition, the workforce was halved to 100 and employee and director salaries were cut by 10%.

The creditors’ proposal reported that OFH was unable to provide support to the business as it owes debts to a secured creditor, Ulster Bank, of around £5.76m and to the company itself of £2.3m.

Both parties have only been able to continue trading through the support of Ulster Bank and, as a result have not made any principal repayments since December 2008. In April 2010, Ulster Bank provided additional invoice finance facilities to C3 Imaging to enable it to fund ongoing working capital requirements.

In its CVA proposal, the company has forecast sales of around £6.6m for 2011, down £400,000 on last year, with an EBITDA of approximately £400,000.

In a statement sent to PrintWeek, the firm said it would have a "financial structure that is more appropriate and sustainable in the context of the future outlook for the business".