GATEBAY LIMITED

1. Risk Rating: HIGH

The risk rating for Gatebay Limited is HIGH. This assessment is driven by the company's negative net asset position, significant working capital deficit, and the presence of a secured charge over all company assets by an external financier (CPF One Limited). The balance sheet indicates technical insolvency, with total liabilities exceeding total assets as of 31 May 2025.

2. Key Concerns

• Balance Sheet Insolvency: As of 31 May 2025, the company reports net liabilities of £13,167 and shareholders' funds of (£13,167). This negative equity position means the company's obligations exceed its assets, a primary red flag for solvency.
• Liquidity Deficit: The company exhibits severe short-term liquidity stress. Current assets stand at £108,028 against current liabilities of £227,703, resulting in net current liabilities of £119,675. The company does not possess sufficient short-term assets to cover debts falling due within one year.
• Secured Debt and Asset Encumbrance: The accounts note that CPF One Limited has a charge against "all the undertaking property and assets of the company." This financing was used to fund a loan to the director. With all assets encumbered, the company has minimal unencumbered collateral to raise additional emergency liquidity.

3. Positive Indicators

• Long Operating History: Incorporated in 1997, the company has maintained an active status for nearly three decades, suggesting a degree of historical operational resilience in its real estate letting/operating activities.
• Director Loan Repayment: The accounts indicate that the director's loan, which peaked at over £400,000, was fully repaid in December 2024. This demonstrates a capacity to settle significant financial obligations, although the source and application of these funds require further context.
• Regulatory Compliance: The company is up to date with its filing requirements at Companies House. Both the annual accounts and confirmation statement are filed and not overdue, indicating adherence to basic statutory administrative duties.

4. Due Diligence Notes

• Source of Director Repayment: The director repaid £513,021 during the year, resulting in a creditor balance owed to the director of £103,747. However, the company's current assets only total £108,028 while current liabilities remain high at £227,703. It is necessary to investigate where the director's repayment funds went if they were not used to clear the CPF One Limited debt, and to understand the nature of the remaining £227,703 in current creditors.
• Terms of CPF One Limited Charge: Further investigation is required into the terms, interest rates, and repayment schedule of the debt owed to CPF One Limited. Given the charge over all assets, the risk of repossession or enforcement action by the creditor in the event of a covenant breach is high.
• Fixed Asset Valuation: The company holds £107,006 in fixed assets. An independent valuation of these assets is required to determine if they could be liquidated to cover the current liabilities, though this would be complicated by the existing charge held by CPF One Limited.
• Director Loan Creditor Position: The accounts show the director is now owed £103,747. It should be confirmed whether this debt to the director is formally subordinated to the CPF One Limited debt, which would slightly mitigate the immediate insolvency risk.