Following the loss of the company’s major customer and a steady decline in the gross profit margin, arising from costs associated with manufacturing in the UK, the directors were forced to reassess the future of the company.
After reviewing the company’s financial position it was established that the company would not be able to service its existing liabilities from future trading. However, it was identified that by importing the majority of the stock the business could be profitable but would be unable to continue with the historic debts.
The company went into Administrative Receivership and 2 of the directors of the failed company set up NewCo as a vehicle to purchase the business and assets from the Administrative Receivers.
We assisted the directors in their negotiations with the Administrative Receivers and were able to raise working capital for NewCo by way of bank overdraft and invoice discounting facilities. In addition to this we raised finance to enable the directors to purchase the freehold property from which the company traded.
The company had been acquired from another company wanting to sell off one of its divisions. The management struggled to trade the company for 2 years and established that they had paid too much for the business when it was acquired, resulting in the company having insufficient working capital.
The company went into Administration and the directors set up NewCo and purchased the business and assets from the Administrators, allowing them to downsize the business.
The company had 22 retail outlets across the country and an annual turnover of £5m.
As a result of a downturn in sales due to market conditions the company began to experience financial problems and the major creditor threatened to issue a winding up petition against the company.
The director sought to appoint an Administrator over the company to protect the business and assets for the benefit of the creditors as a whole.
Negotiations were entered into with a third party and a sale of the business and assets was completed within 24 hours of the Administrator being appointed, with some of the consideration being paid on deferred terms.
The company had a sole distribution agreement in the UK, however, it did not achieve the market penetration originally projected, resulting in significant trading losses being incurred.
The directors concluded that the company could not continue to trade in its current form and appointed Administrators over the company.
The management set up NewCo to purchase the business and the deal was completed within 36 hours of the Administrators appointment, ensuring continuity of supply to customers.
The directors took the decision to set up a conservatory division which was not successful and lost in excess of £1/2m in the first year of trading. In that same year the company incurred 2 bad debts totalling £600K. The accumulation of the events left the company in severe financial difficulties.
The directors appointed Administrators over the company and set up NewCo which purchased the business and assets of the company from the Administrators the same day the appointment was made, resulting in a seamless transition for customers and the employees retained their jobs.
Funding was a mixture of bank and invoice discounting facilities together with a commercial mortgage to purchase the freehold property. The Administrators granted NewCo a licence to occupy the premises whilst the sale was completed and also accepted payment of the consideration on deferred terms.
Adams was the largest specialist retailer of children’s clothing in the UK, operating from 300 stores with an annual turnover of £250m. In 2006 the company experienced a severe downturn in trade and no-one was prepared to fund the trading losses.
The value of the business was its brand and it is acknowledged that brands can devalue very quickly once a company enters formal insolvency.
The company undertook an intense marketing strategy over a period of several weeks in an attempt to sell the business and was able to negotiate a deal with a retail entrepreneur to secure the sale of 273 of the outlets and preserving jobs for 3,200 staff.
It was concluded that the deal would completed by way of a pre-pack via administration. The speed of the sale by the Administrators ensured that the business suffered minimal disruption and the brand remained untarnished.
In developing the business and the customer base, the company had traded at small losses for most months for a couple of years, this accumulated in an unsustainable level of trade creditors.
Redundancies were made, overheads cut and an informal repayment arrangement was offered to the trade creditors, together with a write down of half of their debt in order to keep the business going.
This offer was refused by the creditors, leaving the directors no option but to put the company into liquidation. The directors set up a NewCo and bought the business and assets from the Liquidator within hours of appointment.
NewCo is trading profitably, and ironically it has obtained credit lines from most of the suppliers that refused to agree a write down of debt in the old company.
Taking on a large contract, at very tight margins and excessive overruns / complications, caused severe cash flow problems. The customer not only wouldn’t pay, but threatened court action for consequential losses.
The directors had no alternative but to appoint an Administrator. We assisted the directors form NewCo which acquired the trade and assets. Some of the consideration was paid on a deferred basis.
The directors now avoid large contracts, and the threat of being sued by the ex customer has been nullified.
The company was a profitable trading subsidiary of a large engineering group which was placed in administration.
We assisted the managers of the subsidiary acquire the trade and assets from the Administrator, with an imaginative funding package comprising asset finance, invoice discounting over advance (against future debtors), term loan and deferred consideration.
This business was the subject of a highly leveraged MBO some years ago. In reality the business was acquired at far too high a price and had to carry too much bank debt and deferred consideration.
The company simply could not generate sufficient cash flow to service debt. The bank was exposed by in excess of £500k, whilst they would extend terms they would not accept any debt write off.
The directors couldn’t see any future in the business with unsustainable debt levels and increasing creditor pressure, so the bank appointed an Administrator. Unable to sell the business as a trade sale, the administrators accepted an offer from the directors.
We arranged a suitable funding package and working capital facility to enable the directors to work for themselves, rather than the “bank”
The business now trades successfully, and the bank wrote off far more than the original proposed write down.
This business utilised a lot of funding from the directors and the bank in order to build a brand name in the UK, and a customer base. Unfortunately, this took far longer than originally anticipated, so once the business was established, the debts to the Inland Revenue, the bank and trade creditors were unsustainable.
The company went into Administrative Receivership, and 2 of the 4 original directors set up NewCo to buy the trade and assets from the Administrative Receivers.
We assisted arrange finance for the initial acquisition, together with invoice discounting and trade finance facilities in order to provide adequate working capital.
The long established business went into Administrative Receiver, due to lack of cash. The manufacturing part of the business had effectively disappeared to competition from the Far East, leaving the spares and repairs part of the business (although profitable) operating within too large an overhead base.
The directors acquired the trade and assets of the spares side of the business from the Administrative Receiver via NewCo. The business has now downsized and is trading profitably.
We arranged funding from a third party investor, stock loan and an invoice discounting facility.
This business was an integral supplier to a number of automotive manufacturers in the UK, but was laden down with substantial Crown Debt. The owners were overseas, and had no real interest in funding the business or for the 50 employees.
The bank appointed Administrative Receivers, who invited our client (amongst others) to make an offer for the business.
Within days of being notified of the opportunity, we arranged bridging finance in order to acquire the business quickly. It was imperative that the customer’s production lines were not affected, otherwise there would be no future business.
We have since refinanced the bridging facility with more conventional asset finance, term loan and invoice discounting.
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