Creditor Services
Key Assignments 2007
Hairdressing Salon
Administration of a hairdressing salon based in a run down area of Leeds City centre which was subject to redevelopment. The business and leasehold premises were subject to a Compulsory Purchase Order issued by the Council. The company had in turn issued a Blight Notice against the Council.
Prior to the Administration there was a real threat the company could go into Liquidation which could have jeopardised the company’s claims.
The Administration strategy has focussed around pursuing the significant claims against the Council arising from the Blight Notice and Compulsory Purchase Order and a claim for derogation from grant against the former landlord of the company’s trading premises.
The claims were successfully concluded, all creditors were paid in full and a substantial return was provided to shareholders.
Engineering Company
Administration of an engineering company which predominantly manufactured for the automotive industry as a second tier supplier with turnover of circa £5m per annum. The business proved impossible to sell as a going concern due to competitive pressures from overseas, primarily Japan and Taiwan. We undertook an orderly run down of the company’s trading, whilst realising the company’s substantial book debts avoiding potentially massive counter claims. This allowed us to satisfy the charge holder’s debt in full. The trading surplus in a tough economic market amounted to £49,000
Manufacturer of Bathroom Accessory Products
Administration of a company that was the largest manufacturer of bathroom accessory products in Britain. The company’s customer base included a number of well known high street retailers and major supermarkets, with turnover of circa £4m per annum. The company’s business and assets were extensively marketed but the depressed state of the market and the impact of cheap imports effectively removed the prospect of a going concern sale. Trading the business in Administration resulted in a trading surplus of £156,000, the full recovery for the factoring company plus a book debt surplus of £167,000 which resulted in the company’s secured creditor receiving a large proportion of its debt. In addition to this, we have managed to realise circa £50,000 in respect of goodwill/intellectual property from the sale of the business moulds.
Construction Company
An Administration of a construction company with a turnover approaching £6m. The company had received an adverse adjudication in respect of one substantial contract which resulted in the writing-off of almost £500,000. That write-off, together with other contractual disputes and a downturn in winning new customer contracts, meant that the company had severe cashflow problems. The directors proposed a Company Voluntary Arrangement (“CVA”) (assisted and advised by another firm). This CVA proposal was rejected by the creditors so the directors sought urgent insolvency advice to protect the business and assets of the company and safeguard their personal positions under guarantees given to the Bank. The main purpose of the Administration was to complete outstanding projects and realise contract debtors, work in progress and retentions, where beneficial for the company to do so. Contract debtor realisations together with the surplus on the sale of a freehold property enabled us to discharge the indebtedness to the Bank and preferential creditors. There was also distribution to unsecured creditors.
Precision Sheet Metal Fabrication and Light Engineering Company
An Administration of a precision sheet metal fabrication and light engineering company, which was a second tier supplier into the automotive industry, with a turnover in excess of £5m and employing 105 staff. The company’s major customer withdrew with immediate effect all of its future supply requirements due to alleged quality issues. The company had just finished a successful CVA and as a result of the loss of this major customer was unable to trade profitably in the foreseeable future and to meet the current payment demands of its employees and trade suppliers. The business proved impossible to sell as a going concern. The plant was subsequently sold as a complete package in excess of valuation. In the meantime, an orderly realisation of the stock and work-in-progress took place which allowed for the collection of the financed book debts, in many cases on accelerated payment terms. This approach was particularly successful and resulted in the invoice finance provider being repaid its entire debt within only five weeks. Book debt collections approaching £600,000 were achieved and accounted for almost 95% of the book debt value as at the date of appointment. The resulting surplus enabled a distribution to be made to unsecured creditors.
Sign Manufacturer and Installer
An Administration of a sign manufacturer and installer, predominantly for well known high street stores and supermarkets. The company operated from premises with no formal lease and where the landlord had already taken steps to remove the company from occupation. The main objective of the Administration was to realise the invoice discounted book debt ledger. A short period of Administration trading to complete work-in-progress also allowed for the collection of the financed book debts, many on vastly accelerated terms. This period also allowed for the resolution of potential debtor queries which otherwise would have been difficult to address. A sale by auction of all the remaining assets was held and the premises cleared within three weeks of the Joint Administrators’ appointment, in accordance with the short term occupation agreement negotiated with the landlord.
Hiring Plant and Machinery
An Administration of a family run company, whose affairs were closely associated with that of the family run partnership business. The company’s principal business was that of hiring plant and machinery, together with operators within the agricultural, rail and earthworks sectors. The company invested heavily in plant and machinery based on a forecasted expansion of the rail sector; however, this expansion failed to materialise. This material under-utilisation, together with a large bad debt due to a customer insolvency, led to the company experiencing severe cashflow problems. The main purpose of the Administration was a collect out of the invoice discounted book debt ledger together with the completion of a number of projects. A sale agreement concerning the completion of the company’s contracts in progress to the family partnership led to debtor realisations being particularly successful (approaching 100%) and resulted in the invoice finance provider being repaid its entire debt within nine weeks of appointment.
Supplier of Online Subscription Based Professional Learning Programmes
A Company Voluntary Arrangement of a supplier of online subscription based professional learning programmes for providers of professional services in line with their regulatory CPD requirements. The CVA provided necessary cash flow and has enabled the company to trade profitably whilst pursuing a sale of the separate components of its main business activities in order to gain maximum realisations from its goodwill and intellectual property. To date the company has managed to sell approximately one third of its business, providing substantial returns to the secured creditor. The company continued to trade and it was anticipated that the remainder of its business would be sold, however this was not ultimately possible.
Designed, Developed and Marketed Proprietary Mixed Signal Microchips
An Administration of a fabless semi-conductor company which designed, developed and marketed proprietary mixed signal microchips to service high volume producers of consumer audio products. The company’s reserves at Administration enabled us to trade the company for a short period which allowed sufficient time to explore the market and sell the majority of the stock and equipment for open market prices. Furthermore this trading period allowed us to protect the company’s patents and other intellectual property rights and enable a sale to a US purchaser in a deal that could achieve realisations of over US$325,000. Interim dividends have been paid to unsecured creditors and subject to the realisation of the remaining assets a distribution in excess of 50% will be achieved.
DVD and Home Entertainment Publishing and Distribution Company
An Administration of a DVD and home entertainment publishing and distribution company in the UK and European markets. The Administration became necessary due to the sudden death of the director of the company. The business had ceased to trade shortly prior to the Administration however it was possible to sell the business and assets to a third party. There were various difficulties encountered regarding the Licenses held between various parties and also the collection of international debts. The Administration progressed to a Liquidation in order that the remaining assets could be realised and a distribution made to creditors.