Facts
Background
The
extent of the HMRC arrears at the company caused the invoice discounting
company to pull back its facility. The
CID company was pressing to approach a “big 4” accountancy firm as
administrators who had already planned to cease trading.
Problem
To give
time for a rescue plan to be developed we arranged for the CID facility to be
repaid by a bridging facility provided by a consortium of high net worth
individuals and the company proceeded into administration.
Solution
We
traded the business in administration with funding from a new CID facility, the
bridge funders were repaid within a month by collecting out the pre-appointment
sales ledger and the business was restructured.
A new CEO and new finance director were appointed and a business plan was
prepared. The administration was exited
via a five year CVA.
The company flourished and four years later negotiated an early exit from the
CVA. A residual shareholding and legal
claim are still to be realised in the CVA Trust and all £6 million of creditors
are expected to receive circa 60 pence in the pound.
Difference
Where do
we start. It is very unusual for
insolvency practitioners to arrange for a bank to be repaid pre-appointment but
that ensured that the directors’ choice of administrator (us!) got
appointed. We traded for six months and
appointed new senior management which again is unusual. At HMRC’s insistence we negotiated the
transfer of 90% of the share capital, part of which was used to incentivise the
new senior management. Throughout we
worked closely with a creditors’ committee whose members accounted for 75% of
the total creditors by value.