At BRI Business Insolvency and Recovery (“BRI”), we endeavour to rescue a business wherever possible rather than close it. In this case study, we explain how it was possible to conduct a business rescue to avoid having to make employees redundant.
For more information about business rescue and how BRI can work with you, contact us today.
Helping a Business with a Winding-Up Petition
We were introduced to this company via its former director, who had already used BRI’s services for one of his previous companies. The business essentially hired plant and equipment, including excavators, dumper trucks and loaders, to its clients.
The company found itself struggling financially and unable to pay all of its debts. A winding-up petition was presented by one of the company’s creditors, and following receipt of this, the company’s directors contacted BRI in order to arrange a meeting to discuss the company’s financial position. Following the initial free consultation meeting, representatives from HM Revenue & Customs attended the company’s trading premises in order to distrain over the assets.
BRI liaised with HMRC in order to explain the position, and they agreed to hold off pending a suitable outcome for the company’s creditors.
BRI Business Recovery and Insolvency’s Remit and Business Rescue Plan
When dealing with distressed businesses, time is often not an insolvency practitioner’s friend and taking immediate steps is essential to attempt to rescue the business.
BRI jumped into action to review and explain all available options for the board. In this instance, we identified that if the company’s debt could be restructured, then there was a viable business to be rescued. We decided the best way forward was to rescue the business via a pre-packaged sale and assisted the directors with marketing the business and assets with a view to identify potential interested parties/investors.
Marketing the business takes a couple of weeks if the best outcome is to be achieved, and BRI, therefore, worked closely with the company’s qualifying floating charge holder to ensure that we had their support throughout this period.
Pre-Packaged Sale
Exploring a sale of business via administration requires lots of careful planning to ensure the sale process complies with the insolvency regulations. Seeking the assistance of an independent agent to market the business and assets helps to ensure any subsequent sales are done for fair value and at arm’s length to ensure the best practice principles of pre-package sale are complied with. The agent prepared and sent an initial flyer to their comprehensive database of interested parties and managed enquiries.
Whilst there was much interest in the business, unfortunately, no offers for investment were forthcoming from external parties. However, the company’s management team recognised what changes could be made to the business going forward to make it viable and made a formal offer.
Administrations Sale: Business Rescue and Positive Outcome
The offer was considered to be in the best interest of all creditors. Therefore, upon the administrators being appointed by the charge holder, BRI were able to conclude the sale with the company’s management team.
All assets, except for the un-factored debts, were included within the sale agreement. As part of the pre-packaged sale, all employees were transferred over to the new company, thereby negating any employee preferential or unsecured claims in the administration.
The sale of the business made it possible to pay a dividend to both secured and preferential creditors, which wouldn’t have been the case if the business had simply ceased to trade.
BRI have the experience and expertise to successfully explore potential options to preserve a business, even when faced with the threat of a winding up petition.
If your business is experiencing financial difficulty, and you want to find out more about business rescue and if this could be an option for you, contact our practitioners today.